Correlation Between Naturgy BAN and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Naturgy BAN and Distribuidora at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Naturgy BAN and Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturgy BAN SA and Distribuidora de Gas, you can compare the effects of market volatilities on Naturgy BAN and Distribuidora and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Naturgy BAN with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturgy BAN and Distribuidora.
Diversification Opportunities for Naturgy BAN and Distribuidora
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Naturgy and Distribuidora is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy BAN SA and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas and Naturgy BAN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Naturgy BAN SA are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Naturgy BAN i.e., Naturgy BAN and Distribuidora go up and down completely randomly.
Pair Corralation between Naturgy BAN and Distribuidora
Assuming the 90 days trading horizon Naturgy BAN is expected to generate 1.42 times less return on investment than Distribuidora. In addition to that, Naturgy BAN is 1.06 times more volatile than Distribuidora de Gas. It trades about 0.06 of its total potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.1 per unit of volatility. If you would invest 192,500 in Distribuidora de Gas on November 2, 2024 and sell it today you would earn a total of 14,500 from holding Distribuidora de Gas or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturgy BAN SA vs. Distribuidora de Gas
Performance |
| Timeline |
| Naturgy BAN SA |
| Distribuidora de Gas |
Naturgy BAN and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturgy BAN and Distribuidora
The main advantage of trading using opposite Naturgy BAN and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturgy BAN position performs unexpectedly, Distribuidora can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Distribuidora will offset losses from the drop in Distribuidora's long position.| Naturgy BAN vs. Transportadora de Gas | Naturgy BAN vs. Distribuidora de Gas | Naturgy BAN vs. International Business Machines |
| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. International Business Machines |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |