Correlation Between NRG Energy and Ferrovial
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Ferrovial 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 NRG Energy and Ferrovial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Ferrovial, you can compare the effects of market volatilities on NRG Energy and Ferrovial 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 NRG Energy with a short position of Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Ferrovial.
Diversification Opportunities for NRG Energy and Ferrovial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NRG and Ferrovial is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Ferrovial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial and NRG Energy 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 NRG Energy are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial has no effect on the direction of NRG Energy i.e., NRG Energy and Ferrovial go up and down completely randomly.
Pair Corralation between NRG Energy and Ferrovial
Considering the 90-day investment horizon NRG Energy is expected to generate 1.03 times more return on investment than Ferrovial. However, NRG Energy is 1.03 times more volatile than Ferrovial. It trades about 0.13 of its potential returns per unit of risk. Ferrovial is currently generating about 0.1 per unit of risk. If you would invest 3,026 in NRG Energy on August 30, 2024 and sell it today you would earn a total of 6,863 from holding NRG Energy or generate 226.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.11% |
| Values | Daily Returns |
NRG Energy vs. Ferrovial
Performance |
| Timeline |
| NRG Energy |
| Ferrovial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NRG Energy and Ferrovial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Ferrovial
The main advantage of trading using opposite NRG Energy and Ferrovial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Ferrovial 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 Ferrovial will offset losses from the drop in Ferrovial's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy | NRG Energy vs. Vistra Energy Corp |
| Ferrovial vs. Playtika Holding Corp | Ferrovial vs. Supercom | Ferrovial vs. Integral Ad Science | Ferrovial vs. Pinterest |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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