Correlation Between NewJersey Resources and ENN Energy
Can any of the company-specific risk be diversified away by investing in both NewJersey Resources and ENN Energy 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 ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewJersey Resources and ENN Energy Holdings, you can compare the effects of market volatilities on NewJersey Resources and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewJersey Resources and ENN Energy.
Diversification Opportunities for NewJersey Resources and ENN Energy
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NewJersey and ENN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NewJersey Resources and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of NewJersey Resources i.e., NewJersey Resources and ENN Energy go up and down completely randomly.
Pair Corralation between NewJersey Resources and ENN Energy
Considering the 90-day investment horizon NewJersey Resources is expected to generate 0.24 times more return on investment than ENN Energy. However, NewJersey Resources is 4.08 times less risky than ENN Energy. It trades about 0.01 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.03 per unit of risk. If you would invest 4,741 in NewJersey Resources on November 26, 2024 and sell it today you would earn a total of 20.00 from holding NewJersey Resources or generate 0.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 53.13% |
Values | Daily Returns |
NewJersey Resources vs. ENN Energy Holdings
Performance |
Timeline |
NewJersey Resources |
ENN Energy Holdings |
NewJersey Resources and ENN Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NewJersey Resources and ENN Energy
The main advantage of trading using opposite NewJersey Resources and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewJersey Resources position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.NewJersey Resources vs. Atmos Energy | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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