Correlation Between Northwest Natural and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Northwest Natural and Hong Kong 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 Hong Kong 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 Hong Kong and, you can compare the effects of market volatilities on Northwest Natural and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Natural and Hong Kong.
Diversification Opportunities for Northwest Natural and Hong Kong
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northwest and Hong is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and Hong Kong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong has no effect on the direction of Northwest Natural i.e., Northwest Natural and Hong Kong go up and down completely randomly.
Pair Corralation between Northwest Natural and Hong Kong
Considering the 90-day investment horizon Northwest Natural Gas is expected to under-perform the Hong Kong. But the stock apears to be less risky and, when comparing its historical volatility, Northwest Natural Gas is 2.38 times less risky than Hong Kong. The stock trades about -0.01 of its potential returns per unit of risk. The Hong Kong and is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Hong Kong and on November 2, 2024 and sell it today you would lose (11.00) from holding Hong Kong and or give up 13.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Natural Gas vs. Hong Kong and
Performance |
| Timeline |
| Northwest Natural Gas |
| Hong Kong |
Northwest Natural and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Natural and Hong Kong
The main advantage of trading using opposite Northwest Natural and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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