Correlation Between New Fortress and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both New Fortress and NewJersey Resources 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 New Fortress and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Fortress Energy and NewJersey Resources, you can compare the effects of market volatilities on New Fortress and NewJersey Resources 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 New Fortress with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Fortress and NewJersey Resources.
Diversification Opportunities for New Fortress and NewJersey Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and NewJersey is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding New Fortress Energy and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and New Fortress 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 New Fortress Energy are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of New Fortress i.e., New Fortress and NewJersey Resources go up and down completely randomly.
Pair Corralation between New Fortress and NewJersey Resources
Considering the 90-day investment horizon New Fortress Energy is expected to under-perform the NewJersey Resources. In addition to that, New Fortress is 2.96 times more volatile than NewJersey Resources. It trades about -0.07 of its total potential returns per unit of risk. NewJersey Resources is currently generating about 0.02 per unit of volatility. If you would invest 4,539 in NewJersey Resources on August 23, 2024 and sell it today you would earn a total of 446.00 from holding NewJersey Resources or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Fortress Energy vs. NewJersey Resources
Performance |
| Timeline |
| New Fortress Energy |
| NewJersey Resources |
New Fortress and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Fortress and NewJersey Resources
The main advantage of trading using opposite New Fortress and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Fortress position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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