Correlation Between Navigator Holdings and Golar LNG
Can any of the company-specific risk be diversified away by investing in both Navigator Holdings and Golar LNG 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 Navigator Holdings and Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Navigator Holdings and Golar LNG Limited, you can compare the effects of market volatilities on Navigator Holdings and Golar LNG 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 Navigator Holdings with a short position of Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Holdings and Golar LNG.
Diversification Opportunities for Navigator Holdings and Golar LNG
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Navigator and Golar is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited and Navigator Holdings 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 Navigator Holdings are associated (or correlated) with Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of Navigator Holdings i.e., Navigator Holdings and Golar LNG go up and down completely randomly.
Pair Corralation between Navigator Holdings and Golar LNG
Given the investment horizon of 90 days Navigator Holdings is expected to generate 0.62 times more return on investment than Golar LNG. However, Navigator Holdings is 1.61 times less risky than Golar LNG. It trades about 0.05 of its potential returns per unit of risk. Golar LNG Limited is currently generating about 0.01 per unit of risk. If you would invest 1,571 in Navigator Holdings on August 24, 2024 and sell it today you would earn a total of 21.00 from holding Navigator Holdings or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Navigator Holdings vs. Golar LNG Limited
Performance |
| Timeline |
| Navigator Holdings |
| Golar LNG Limited |
Navigator Holdings and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navigator Holdings and Golar LNG
The main advantage of trading using opposite Navigator Holdings and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Holdings position performs unexpectedly, Golar LNG 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 Golar LNG will offset losses from the drop in Golar LNG's long position.| Navigator Holdings vs. Scorpio Tankers | Navigator Holdings vs. Teekay Tankers | Navigator Holdings vs. International Seaways | Navigator Holdings vs. Frontline |
| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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