Correlation Between NewJersey Resources and APA
Can any of the company-specific risk be diversified away by investing in both NewJersey Resources and APA 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 NewJersey Resources and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewJersey Resources and APA Group, you can compare the effects of market volatilities on NewJersey Resources and APA 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 NewJersey Resources with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewJersey Resources and APA.
Diversification Opportunities for NewJersey Resources and APA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NewJersey and APA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NewJersey Resources and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group and NewJersey Resources 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 NewJersey Resources are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of NewJersey Resources i.e., NewJersey Resources and APA go up and down completely randomly.
Pair Corralation between NewJersey Resources and APA
Considering the 90-day investment horizon NewJersey Resources is expected to generate 0.25 times more return on investment than APA. However, NewJersey Resources is 4.0 times less risky than APA. It trades about 0.05 of its potential returns per unit of risk. APA Group is currently generating about 0.0 per unit of risk. If you would invest 4,057 in NewJersey Resources on November 9, 2024 and sell it today you would earn a total of 638.00 from holding NewJersey Resources or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.03% |
| Values | Daily Returns |
NewJersey Resources vs. APA Group
Performance |
| Timeline |
| NewJersey Resources |
| APA Group |
NewJersey Resources and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewJersey Resources and APA
The main advantage of trading using opposite NewJersey Resources and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewJersey Resources position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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