Correlation Between NGL Energy and J Long
Can any of the company-specific risk be diversified away by investing in both NGL Energy and J Long 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 J Long 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 J Long Group Limited, you can compare the effects of market volatilities on NGL Energy and J Long 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 J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and J Long.
Diversification Opportunities for NGL Energy and J Long
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between NGL and J Long is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group 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 J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of NGL Energy i.e., NGL Energy and J Long go up and down completely randomly.
Pair Corralation between NGL Energy and J Long
Considering the 90-day investment horizon NGL Energy Partners is expected to generate 0.25 times more return on investment than J Long. However, NGL Energy Partners is 4.05 times less risky than J Long. It trades about 0.07 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.01 per unit of risk. If you would invest 268.00 in NGL Energy Partners on November 2, 2024 and sell it today you would earn a total of 288.00 from holding NGL Energy Partners or generate 107.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 51.82% |
| Values | Daily Returns |
NGL Energy Partners vs. J Long Group Limited
Performance |
| Timeline |
| NGL Energy Partners |
| J Long Group |
NGL Energy and J Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and J Long
The main advantage of trading using opposite NGL Energy and J Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, J Long 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 J Long will offset losses from the drop in J Long'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 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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