Correlation Between NewJersey Resources and Beijing Gas
Can any of the company-specific risk be diversified away by investing in both NewJersey Resources and Beijing Gas 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 Beijing Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewJersey Resources and Beijing Gas Blue, you can compare the effects of market volatilities on NewJersey Resources and Beijing Gas 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 Beijing Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewJersey Resources and Beijing Gas.
Diversification Opportunities for NewJersey Resources and Beijing Gas
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NewJersey and Beijing is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NewJersey Resources and Beijing Gas Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Gas Blue 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 Beijing Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Gas Blue has no effect on the direction of NewJersey Resources i.e., NewJersey Resources and Beijing Gas go up and down completely randomly.
Pair Corralation between NewJersey Resources and Beijing Gas
Considering the 90-day investment horizon NewJersey Resources is expected to generate 0.12 times more return on investment than Beijing Gas. However, NewJersey Resources is 8.22 times less risky than Beijing Gas. It trades about 0.02 of its potential returns per unit of risk. Beijing Gas Blue is currently generating about -0.13 per unit of risk. If you would invest 4,639 in NewJersey Resources on November 8, 2024 and sell it today you would earn a total of 56.00 from holding NewJersey Resources or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
NewJersey Resources vs. Beijing Gas Blue
Performance |
| Timeline |
| NewJersey Resources |
| Beijing Gas Blue |
NewJersey Resources and Beijing Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewJersey Resources and Beijing Gas
The main advantage of trading using opposite NewJersey Resources and Beijing Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewJersey Resources position performs unexpectedly, Beijing Gas 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 Beijing Gas will offset losses from the drop in Beijing Gas' long position.| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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