Correlation Between Golar LNG and New York
Can any of the company-specific risk be diversified away by investing in both Golar LNG and New York 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 New York 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 New York Community, you can compare the effects of market volatilities on Golar LNG and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golar LNG and New York.
Diversification Opportunities for Golar LNG and New York
Poor diversification
The 3 months correlation between Golar and New is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Golar LNG Limited and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of Golar LNG i.e., Golar LNG and New York go up and down completely randomly.
Pair Corralation between Golar LNG and New York
Given the investment horizon of 90 days Golar LNG Limited is expected to generate 0.78 times more return on investment than New York. However, Golar LNG Limited is 1.28 times less risky than New York. It trades about 0.07 of its potential returns per unit of risk. New York Community is currently generating about 0.02 per unit of risk. If you would invest 2,248 in Golar LNG Limited on August 30, 2024 and sell it today you would earn a total of 1,681 from holding Golar LNG Limited or generate 74.78% 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. New York Community
Performance |
| Timeline |
| Golar LNG Limited |
| New York Community |
Golar LNG and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golar LNG and New York
The main advantage of trading using opposite Golar LNG and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golar LNG position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
| New York vs. Wintrust Financial Corp | New York vs. Pinnacle Financial Partners | New York vs. Associated Banc Corp | New York vs. WesBanco |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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