Correlation Between National Fuel and Galp Energa
Can any of the company-specific risk be diversified away by investing in both National Fuel and Galp Energa 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 Fuel and Galp Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Fuel Gas and Galp Energa, you can compare the effects of market volatilities on National Fuel and Galp Energa 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 Fuel with a short position of Galp Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Fuel and Galp Energa.
Diversification Opportunities for National Fuel and Galp Energa
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Galp is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Galp Energa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energa and National Fuel 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 Fuel Gas are associated (or correlated) with Galp Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energa has no effect on the direction of National Fuel i.e., National Fuel and Galp Energa go up and down completely randomly.
Pair Corralation between National Fuel and Galp Energa
Considering the 90-day investment horizon National Fuel Gas is expected to generate 1.39 times more return on investment than Galp Energa. However, National Fuel is 1.39 times more volatile than Galp Energa. It trades about 0.12 of its potential returns per unit of risk. Galp Energa is currently generating about -0.08 per unit of risk. If you would invest 6,130 in National Fuel Gas on August 28, 2024 and sell it today you would earn a total of 269.00 from holding National Fuel Gas or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Fuel Gas vs. Galp Energa
Performance |
| Timeline |
| National Fuel Gas |
| Galp Energa |
National Fuel and Galp Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Fuel and Galp Energa
The main advantage of trading using opposite National Fuel and Galp Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Fuel position performs unexpectedly, Galp Energa 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 Galp Energa will offset losses from the drop in Galp Energa's long position.| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
| Galp Energa vs. Shell PLC ADR | Galp Energa vs. Equinor ASA ADR | Galp Energa vs. BP PLC ADR | Galp Energa vs. Eni SpA ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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