Correlation Between Northwest Natural and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both Northwest Natural and Awilco Drilling 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 Awilco Drilling 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 Awilco Drilling PLC, you can compare the effects of market volatilities on Northwest Natural and Awilco Drilling 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 Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Natural and Awilco Drilling.
Diversification Opportunities for Northwest Natural and Awilco Drilling
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northwest and Awilco is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC 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 Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Northwest Natural i.e., Northwest Natural and Awilco Drilling go up and down completely randomly.
Pair Corralation between Northwest Natural and Awilco Drilling
Considering the 90-day investment horizon Northwest Natural Gas is expected to generate 2.72 times more return on investment than Awilco Drilling. However, Northwest Natural is 2.72 times more volatile than Awilco Drilling PLC. It trades about 0.3 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about -0.22 per unit of risk. If you would invest 3,992 in Northwest Natural Gas on August 28, 2024 and sell it today you would earn a total of 393.00 from holding Northwest Natural Gas or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Natural Gas vs. Awilco Drilling PLC
Performance |
| Timeline |
| Northwest Natural Gas |
| Awilco Drilling PLC |
Northwest Natural and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Natural and Awilco Drilling
The main advantage of trading using opposite Northwest Natural and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling's long position.| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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