Correlation Between Nuenergy Gas and Wam Capital
Can any of the company-specific risk be diversified away by investing in both Nuenergy Gas and Wam Capital 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 Nuenergy Gas and Wam Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuenergy Gas and Wam Capital, you can compare the effects of market volatilities on Nuenergy Gas and Wam Capital 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 Nuenergy Gas with a short position of Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuenergy Gas and Wam Capital.
Diversification Opportunities for Nuenergy Gas and Wam Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nuenergy and Wam is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nuenergy Gas and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and Nuenergy 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 Nuenergy Gas are associated (or correlated) with Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of Nuenergy Gas i.e., Nuenergy Gas and Wam Capital go up and down completely randomly.
Pair Corralation between Nuenergy Gas and Wam Capital
Assuming the 90 days trading horizon Nuenergy Gas is expected to generate 8.0 times more return on investment than Wam Capital. However, Nuenergy Gas is 8.0 times more volatile than Wam Capital. It trades about 0.01 of its potential returns per unit of risk. Wam Capital is currently generating about 0.08 per unit of risk. If you would invest 2.60 in Nuenergy Gas on November 1, 2024 and sell it today you would lose (0.70) from holding Nuenergy Gas or give up 26.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nuenergy Gas vs. Wam Capital
Performance |
| Timeline |
| Nuenergy Gas |
| Wam Capital |
Nuenergy Gas and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuenergy Gas and Wam Capital
The main advantage of trading using opposite Nuenergy Gas and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuenergy Gas position performs unexpectedly, Wam Capital 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 Wam Capital will offset losses from the drop in Wam Capital's long position.| Nuenergy Gas vs. Westpac Banking | Nuenergy Gas vs. ABACUS STORAGE KING | Nuenergy Gas vs. Odyssey Energy | Nuenergy Gas vs. Qantas Airways |
| Wam Capital vs. Infomedia | Wam Capital vs. EROAD | Wam Capital vs. COAST ENTERTAINMENT HOLDINGS | Wam Capital vs. Truscott Mining Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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