Correlation Between High Arctic and Natural Gas
Can any of the company-specific risk be diversified away by investing in both High Arctic and Natural Gas 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 High Arctic and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Arctic Energy and Natural Gas Services, you can compare the effects of market volatilities on High Arctic and Natural Gas 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 High Arctic with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Arctic and Natural Gas.
Diversification Opportunities for High Arctic and Natural Gas
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between High and Natural is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding High Arctic Energy and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services and High Arctic 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 High Arctic Energy are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of High Arctic i.e., High Arctic and Natural Gas go up and down completely randomly.
Pair Corralation between High Arctic and Natural Gas
Assuming the 90 days horizon High Arctic Energy is expected to under-perform the Natural Gas. But the pink sheet apears to be less risky and, when comparing its historical volatility, High Arctic Energy is 1.55 times less risky than Natural Gas. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Natural Gas Services is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Natural Gas Services on September 4, 2024 and sell it today you would earn a total of 802.00 from holding Natural Gas Services or generate 40.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Arctic Energy vs. Natural Gas Services
Performance |
| Timeline |
| High Arctic Energy |
| Natural Gas Services |
High Arctic and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Arctic and Natural Gas
The main advantage of trading using opposite High Arctic and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Arctic position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| High Arctic vs. Seadrill Limited | High Arctic vs. Noble plc | High Arctic vs. Borr Drilling | High Arctic vs. SCOR PK |
| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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