Correlation Between NRG Energy and Joint Stock
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Joint Stock 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 Joint Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Joint Stock, you can compare the effects of market volatilities on NRG Energy and Joint Stock 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 Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Joint Stock.
Diversification Opportunities for NRG Energy and Joint Stock
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NRG and Joint is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of NRG Energy i.e., NRG Energy and Joint Stock go up and down completely randomly.
Pair Corralation between NRG Energy and Joint Stock
Considering the 90-day investment horizon NRG Energy is expected to generate 0.71 times more return on investment than Joint Stock. However, NRG Energy is 1.41 times less risky than Joint Stock. It trades about 0.16 of its potential returns per unit of risk. Joint Stock is currently generating about 0.07 per unit of risk. If you would invest 3,255 in NRG Energy on August 31, 2024 and sell it today you would earn a total of 6,906 from holding NRG Energy or generate 212.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 73.8% |
| Values | Daily Returns |
NRG Energy vs. Joint Stock
Performance |
| Timeline |
| NRG Energy |
| Joint Stock |
NRG Energy and Joint Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Joint Stock
The main advantage of trading using opposite NRG Energy and Joint Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Joint Stock 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 Joint Stock will offset losses from the drop in Joint Stock's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| Joint Stock vs. PVH Corp | Joint Stock vs. Ecoloclean Industrs | Joint Stock vs. Siriuspoint | Joint Stock vs. Commonwealth Bank of |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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