Correlation Between NewJersey Resources and RGC Resources
Can any of the company-specific risk be diversified away by investing in both NewJersey Resources and RGC Resources 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 RGC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewJersey Resources and RGC Resources, you can compare the effects of market volatilities on NewJersey Resources and RGC Resources 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 RGC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewJersey Resources and RGC Resources.
Diversification Opportunities for NewJersey Resources and RGC Resources
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NewJersey and RGC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NewJersey Resources and RGC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RGC Resources 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 RGC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RGC Resources has no effect on the direction of NewJersey Resources i.e., NewJersey Resources and RGC Resources go up and down completely randomly.
Pair Corralation between NewJersey Resources and RGC Resources
Considering the 90-day investment horizon NewJersey Resources is expected to generate 2.05 times less return on investment than RGC Resources. But when comparing it to its historical volatility, NewJersey Resources is 2.18 times less risky than RGC Resources. It trades about 0.05 of its potential returns per unit of risk. RGC Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,970 in RGC Resources on November 2, 2024 and sell it today you would earn a total of 182.00 from holding RGC Resources or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewJersey Resources vs. RGC Resources
Performance |
| Timeline |
| NewJersey Resources |
| RGC Resources |
NewJersey Resources and RGC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewJersey Resources and RGC Resources
The main advantage of trading using opposite NewJersey Resources and RGC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewJersey Resources position performs unexpectedly, RGC Resources 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 RGC Resources will offset losses from the drop in RGC Resources' long position.| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
| RGC Resources vs. NewJersey Resources | RGC Resources vs. One Gas | RGC Resources vs. Northwest Natural Gas | RGC Resources vs. Chesapeake Utilities |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |