Correlation Between NGL Energy and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both NGL Energy and Lafargeholcim 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 Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on NGL Energy and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and Lafargeholcim.
Diversification Opportunities for NGL Energy and Lafargeholcim
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NGL and Lafargeholcim is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of NGL Energy i.e., NGL Energy and Lafargeholcim go up and down completely randomly.
Pair Corralation between NGL Energy and Lafargeholcim
Considering the 90-day investment horizon NGL Energy Partners is expected to generate 2.05 times more return on investment than Lafargeholcim. However, NGL Energy is 2.05 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.25 of its potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest 398.00 in NGL Energy Partners on November 2, 2024 and sell it today you would earn a total of 158.00 from holding NGL Energy Partners or generate 39.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| NGL Energy Partners |
| Lafargeholcim ADR |
NGL Energy and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and Lafargeholcim
The main advantage of trading using opposite NGL Energy and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim's long position.| NGL Energy vs. NGL Energy Partners | NGL Energy vs. Dynagas LNG Partners | NGL Energy vs. Martin Midstream Partners | NGL Energy vs. Kinetik Holdings |
| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |