Correlation Between Northwest Natural and UGI Corp
Can any of the company-specific risk be diversified away by investing in both Northwest Natural and UGI Corp 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 UGI Corp 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 UGI Corp Unit, you can compare the effects of market volatilities on Northwest Natural and UGI Corp 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 UGI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Natural and UGI Corp.
Diversification Opportunities for Northwest Natural and UGI Corp
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northwest and UGI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and UGI Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGI Corp Unit 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 UGI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGI Corp Unit has no effect on the direction of Northwest Natural i.e., Northwest Natural and UGI Corp go up and down completely randomly.
Pair Corralation between Northwest Natural and UGI Corp
If you would invest 3,961 in Northwest Natural Gas on October 20, 2024 and sell it today you would earn a total of 80.00 from holding Northwest Natural Gas or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Northwest Natural Gas vs. UGI Corp Unit
Performance |
| Timeline |
| Northwest Natural Gas |
| UGI Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Northwest Natural and UGI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Natural and UGI Corp
The main advantage of trading using opposite Northwest Natural and UGI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural position performs unexpectedly, UGI Corp 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 UGI Corp will offset losses from the drop in UGI Corp'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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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