Correlation Between Natural Gas and Enterprise
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Enterprise 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 Natural Gas and Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Services and Enterprise Group, you can compare the effects of market volatilities on Natural Gas and Enterprise 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 Natural Gas with a short position of Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Enterprise.
Diversification Opportunities for Natural Gas and Enterprise
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Natural and Enterprise is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Group and Natural Gas 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 Natural Gas Services are associated (or correlated) with Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Group has no effect on the direction of Natural Gas i.e., Natural Gas and Enterprise go up and down completely randomly.
Pair Corralation between Natural Gas and Enterprise
Considering the 90-day investment horizon Natural Gas Services is expected to generate 0.48 times more return on investment than Enterprise. However, Natural Gas Services is 2.09 times less risky than Enterprise. It trades about 0.55 of its potential returns per unit of risk. Enterprise Group is currently generating about 0.02 per unit of risk. If you would invest 1,990 in Natural Gas Services on September 4, 2024 and sell it today you would earn a total of 802.00 from holding Natural Gas Services or generate 40.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Gas Services vs. Enterprise Group
Performance |
| Timeline |
| Natural Gas Services |
| Enterprise Group |
Natural Gas and Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Enterprise
The main advantage of trading using opposite Natural Gas and Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Enterprise 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 Enterprise will offset losses from the drop in Enterprise's long position.| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
| Enterprise vs. Bri Chem Corp | Enterprise vs. High Arctic Energy | Enterprise vs. CES Energy Solutions | Enterprise vs. Mccoy Global |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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