Correlation Between Northwest Natural and APA
Can any of the company-specific risk be diversified away by investing in both Northwest Natural and APA 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 Northwest Natural and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Natural Gas and APA Group, you can compare the effects of market volatilities on Northwest Natural and APA 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 Northwest Natural with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Natural and APA.
Diversification Opportunities for Northwest Natural and APA
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northwest and APA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group and Northwest Natural 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 Northwest Natural Gas are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of Northwest Natural i.e., Northwest Natural and APA go up and down completely randomly.
Pair Corralation between Northwest Natural and APA
Considering the 90-day investment horizon Northwest Natural Gas is expected to generate 0.41 times more return on investment than APA. However, Northwest Natural Gas is 2.43 times less risky than APA. It trades about 0.04 of its potential returns per unit of risk. APA Group is currently generating about 0.0 per unit of risk. If you would invest 3,746 in Northwest Natural Gas on September 4, 2024 and sell it today you would earn a total of 580.00 from holding Northwest Natural Gas or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.89% |
| Values | Daily Returns |
Northwest Natural Gas vs. APA Group
Performance |
| Timeline |
| Northwest Natural Gas |
| APA Group |
Northwest Natural and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Natural and APA
The main advantage of trading using opposite Northwest Natural and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |