Correlation Between Nextera Energy and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Nextera Energy 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 Nextera Energy and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy Partners and Cheniere Energy, you can compare the effects of market volatilities on Nextera Energy 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 Nextera Energy with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Cheniere Energy.
Diversification Opportunities for Nextera Energy and Cheniere Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nextera and Cheniere is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy and Nextera 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 Nextera Energy Partners 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 has no effect on the direction of Nextera Energy i.e., Nextera Energy and Cheniere Energy go up and down completely randomly.
Pair Corralation between Nextera Energy and Cheniere Energy
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the Cheniere Energy. In addition to that, Nextera Energy is 2.37 times more volatile than Cheniere Energy. It trades about -0.02 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.1 per unit of volatility. If you would invest 17,006 in Cheniere Energy on September 2, 2024 and sell it today you would earn a total of 5,395 from holding Cheniere Energy or generate 31.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy Partners vs. Cheniere Energy
Performance |
| Timeline |
| Nextera Energy Partners |
| Cheniere Energy |
Nextera Energy and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Cheniere Energy
The main advantage of trading using opposite Nextera Energy and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy 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.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
| Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Williams Companies | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. ONEOK Inc |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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