Correlation Between NRG Energy and Lipocine
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Lipocine 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 Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Lipocine, you can compare the effects of market volatilities on NRG Energy and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Lipocine.
Diversification Opportunities for NRG Energy and Lipocine
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NRG and Lipocine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of NRG Energy i.e., NRG Energy and Lipocine go up and down completely randomly.
Pair Corralation between NRG Energy and Lipocine
Considering the 90-day investment horizon NRG Energy is expected to generate 0.36 times more return on investment than Lipocine. However, NRG Energy is 2.79 times less risky than Lipocine. It trades about 0.1 of its potential returns per unit of risk. Lipocine is currently generating about -0.05 per unit of risk. If you would invest 8,833 in NRG Energy on August 28, 2024 and sell it today you would earn a total of 354.00 from holding NRG Energy or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. Lipocine
Performance |
| Timeline |
| NRG Energy |
| Lipocine |
NRG Energy and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Lipocine
The main advantage of trading using opposite NRG Energy and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| Lipocine vs. Reviva Pharmaceuticals Holdings | Lipocine vs. ZyVersa Therapeutics | Lipocine vs. Unicycive Therapeutics | Lipocine vs. Checkpoint Therapeutics |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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