Correlation Between Cheniere Energy and FLEX LNG
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and FLEX LNG 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 Cheniere Energy and FLEX LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy and FLEX LNG, you can compare the effects of market volatilities on Cheniere Energy and FLEX LNG 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 Cheniere Energy with a short position of FLEX LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and FLEX LNG.
Diversification Opportunities for Cheniere Energy and FLEX LNG
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cheniere and FLEX is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and Cheniere Energy 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 Cheniere Energy are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and FLEX LNG go up and down completely randomly.
Pair Corralation between Cheniere Energy and FLEX LNG
Considering the 90-day investment horizon Cheniere Energy is expected to generate 0.67 times more return on investment than FLEX LNG. However, Cheniere Energy is 1.5 times less risky than FLEX LNG. It trades about 0.67 of its potential returns per unit of risk. FLEX LNG is currently generating about 0.38 per unit of risk. If you would invest 20,889 in Cheniere Energy on October 21, 2024 and sell it today you would earn a total of 4,387 from holding Cheniere Energy or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy vs. FLEX LNG
Performance |
| Timeline |
| Cheniere Energy |
| FLEX LNG |
Cheniere Energy and FLEX LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and FLEX LNG
The main advantage of trading using opposite Cheniere Energy and FLEX LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, FLEX LNG 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 FLEX LNG will offset losses from the drop in FLEX LNG's long position.| Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Williams Companies | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. ONEOK Inc |
| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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