Correlation Between Golar LNG and Excelerate Energy
Can any of the company-specific risk be diversified away by investing in both Golar LNG and Excelerate Energy 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 Golar LNG and Excelerate Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golar LNG Limited and Excelerate Energy, you can compare the effects of market volatilities on Golar LNG and Excelerate Energy 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 Golar LNG with a short position of Excelerate Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golar LNG and Excelerate Energy.
Diversification Opportunities for Golar LNG and Excelerate Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golar and Excelerate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Golar LNG Limited and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy and Golar LNG 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 Golar LNG Limited are associated (or correlated) with Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Golar LNG i.e., Golar LNG and Excelerate Energy go up and down completely randomly.
Pair Corralation between Golar LNG and Excelerate Energy
Given the investment horizon of 90 days Golar LNG Limited is expected to generate 0.75 times more return on investment than Excelerate Energy. However, Golar LNG Limited is 1.33 times less risky than Excelerate Energy. It trades about 0.06 of its potential returns per unit of risk. Excelerate Energy is currently generating about 0.02 per unit of risk. If you would invest 2,343 in Golar LNG Limited on August 23, 2024 and sell it today you would earn a total of 1,343 from holding Golar LNG Limited or generate 57.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golar LNG Limited vs. Excelerate Energy
Performance |
| Timeline |
| Golar LNG Limited |
| Excelerate Energy |
Golar LNG and Excelerate Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golar LNG and Excelerate Energy
The main advantage of trading using opposite Golar LNG and Excelerate Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golar LNG position performs unexpectedly, Excelerate Energy 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 Excelerate Energy will offset losses from the drop in Excelerate Energy's long position.| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
| Excelerate Energy vs. Atlantica Sustainable Infrastructure | Excelerate Energy vs. Clearway Energy | Excelerate Energy vs. Brookfield Renewable Corp | Excelerate Energy vs. Nextera Energy Partners |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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