Correlation Between NGL Energy and Southern
Can any of the company-specific risk be diversified away by investing in both NGL Energy and Southern 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 NGL Energy and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGL Energy Partners and Southern Co, you can compare the effects of market volatilities on NGL Energy and Southern 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 NGL Energy with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and Southern.
Diversification Opportunities for NGL Energy and Southern
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NGL and Southern is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and NGL 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 NGL Energy Partners are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of NGL Energy i.e., NGL Energy and Southern go up and down completely randomly.
Pair Corralation between NGL Energy and Southern
Assuming the 90 days trading horizon NGL Energy Partners is expected to generate 0.8 times more return on investment than Southern. However, NGL Energy Partners is 1.25 times less risky than Southern. It trades about 0.17 of its potential returns per unit of risk. Southern Co is currently generating about -0.11 per unit of risk. If you would invest 2,294 in NGL Energy Partners on August 24, 2024 and sell it today you would earn a total of 46.00 from holding NGL Energy Partners or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. Southern Co
Performance |
| Timeline |
| NGL Energy Partners |
| Southern |
NGL Energy and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and Southern
The main advantage of trading using opposite NGL Energy and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| NGL Energy vs. NGL Energy Partners | NGL Energy vs. Dynagas LNG Partners | NGL Energy vs. GasLog Partners LP | NGL Energy vs. GasLog Partners LP |
| Southern vs. Atmos Energy | Southern vs. Emerson Radio | Southern vs. Antero Midstream Partners | Southern vs. Playtech plc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |