Correlation Between National Energy and Greenway Technologies
Can any of the company-specific risk be diversified away by investing in both National Energy and Greenway Technologies 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 National Energy and Greenway Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Energy Services and Greenway Technologies, you can compare the effects of market volatilities on National Energy and Greenway Technologies 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 National Energy with a short position of Greenway Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and Greenway Technologies.
Diversification Opportunities for National Energy and Greenway Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Greenway is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services and Greenway Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenway Technologies and National 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 National Energy Services are associated (or correlated) with Greenway Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenway Technologies has no effect on the direction of National Energy i.e., National Energy and Greenway Technologies go up and down completely randomly.
Pair Corralation between National Energy and Greenway Technologies
Given the investment horizon of 90 days National Energy Services is expected to under-perform the Greenway Technologies. But the stock apears to be less risky and, when comparing its historical volatility, National Energy Services is 6.57 times less risky than Greenway Technologies. The stock trades about -0.28 of its potential returns per unit of risk. The Greenway Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Greenway Technologies on November 29, 2024 and sell it today you would earn a total of 0.50 from holding Greenway Technologies or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Energy Services vs. Greenway Technologies
Performance |
| Timeline |
| National Energy Services |
| Greenway Technologies |
National Energy and Greenway Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Energy and Greenway Technologies
The main advantage of trading using opposite National Energy and Greenway Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy position performs unexpectedly, Greenway Technologies 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 Greenway Technologies will offset losses from the drop in Greenway Technologies' long position.| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
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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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