Correlation Between New Fortress and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both New Fortress and OPAL Fuels 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 OPAL Fuels 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 OPAL Fuels, you can compare the effects of market volatilities on New Fortress and OPAL Fuels 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 OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Fortress and OPAL Fuels.
Diversification Opportunities for New Fortress and OPAL Fuels
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and OPAL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding New Fortress Energy and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels 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 OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of New Fortress i.e., New Fortress and OPAL Fuels go up and down completely randomly.
Pair Corralation between New Fortress and OPAL Fuels
Considering the 90-day investment horizon New Fortress Energy is expected to generate 1.95 times more return on investment than OPAL Fuels. However, New Fortress is 1.95 times more volatile than OPAL Fuels. It trades about 0.22 of its potential returns per unit of risk. OPAL Fuels is currently generating about 0.06 per unit of risk. If you would invest 865.00 in New Fortress Energy on August 31, 2024 and sell it today you would earn a total of 183.00 from holding New Fortress Energy or generate 21.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Fortress Energy vs. OPAL Fuels
Performance |
| Timeline |
| New Fortress Energy |
| OPAL Fuels |
New Fortress and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Fortress and OPAL Fuels
The main advantage of trading using opposite New Fortress and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Fortress position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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