Correlation Between Nordic American and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Nordic American and Cheniere 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 Nordic American and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic American Tankers and Cheniere Energy Partners, you can compare the effects of market volatilities on Nordic American and Cheniere 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 Nordic American with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic American and Cheniere Energy.
Diversification Opportunities for Nordic American and Cheniere Energy
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Cheniere is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Nordic American 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 Nordic American Tankers are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Nordic American i.e., Nordic American and Cheniere Energy go up and down completely randomly.
Pair Corralation between Nordic American and Cheniere Energy
Considering the 90-day investment horizon Nordic American Tankers is expected to under-perform the Cheniere Energy. In addition to that, Nordic American is 1.08 times more volatile than Cheniere Energy Partners. It trades about -0.04 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.04 per unit of volatility. If you would invest 4,649 in Cheniere Energy Partners on January 10, 2025 and sell it today you would earn a total of 1,054 from holding Cheniere Energy Partners or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic American Tankers vs. Cheniere Energy Partners
Performance |
| Timeline |
| Nordic American Tankers |
| Cheniere Energy Partners |
Nordic American and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic American and Cheniere Energy
The main advantage of trading using opposite Nordic American and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic American position performs unexpectedly, Cheniere 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| Nordic American vs. Genco Shipping Trading | Nordic American vs. Golden Ocean Group | Nordic American vs. Star Bulk Carriers | Nordic American vs. Oceanpal |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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