Correlation Between National Fuel and Shell PLC
Can any of the company-specific risk be diversified away by investing in both National Fuel and Shell PLC 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 Shell PLC 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 Shell PLC ADR, you can compare the effects of market volatilities on National Fuel and Shell PLC 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 Shell PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Fuel and Shell PLC.
Diversification Opportunities for National Fuel and Shell PLC
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Shell is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Shell PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC ADR 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 Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC ADR has no effect on the direction of National Fuel i.e., National Fuel and Shell PLC go up and down completely randomly.
Pair Corralation between National Fuel and Shell PLC
Considering the 90-day investment horizon National Fuel Gas is expected to generate 1.68 times more return on investment than Shell PLC. However, National Fuel is 1.68 times more volatile than Shell PLC ADR. It trades about 0.04 of its potential returns per unit of risk. Shell PLC ADR is currently generating about 0.0 per unit of risk. If you would invest 6,254 in National Fuel Gas on August 23, 2024 and sell it today you would earn a total of 97.00 from holding National Fuel Gas or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Fuel Gas vs. Shell PLC ADR
Performance |
| Timeline |
| National Fuel Gas |
| Shell PLC ADR |
National Fuel and Shell PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Fuel and Shell PLC
The main advantage of trading using opposite National Fuel and Shell PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Fuel position performs unexpectedly, Shell PLC 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 Shell PLC will offset losses from the drop in Shell PLC'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 |
| Shell PLC vs. Exxon Mobil Corp | Shell PLC vs. Chevron Corp | Shell PLC vs. TotalEnergies SE ADR | Shell PLC vs. Petroleo Brasileiro Petrobras |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |