Correlation Between Northwest Natural and Umicore SA
Can any of the company-specific risk be diversified away by investing in both Northwest Natural and Umicore SA 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 Umicore SA 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 Umicore SA ADR, you can compare the effects of market volatilities on Northwest Natural and Umicore SA 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 Umicore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Natural and Umicore SA.
Diversification Opportunities for Northwest Natural and Umicore SA
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northwest and Umicore is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and Umicore SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA ADR 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 Umicore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umicore SA ADR has no effect on the direction of Northwest Natural i.e., Northwest Natural and Umicore SA go up and down completely randomly.
Pair Corralation between Northwest Natural and Umicore SA
Considering the 90-day investment horizon Northwest Natural Gas is expected to generate 0.59 times more return on investment than Umicore SA. However, Northwest Natural Gas is 1.7 times less risky than Umicore SA. It trades about 0.29 of its potential returns per unit of risk. Umicore SA ADR is currently generating about -0.21 per unit of risk. If you would invest 3,951 in Northwest Natural Gas on August 31, 2024 and sell it today you would earn a total of 383.00 from holding Northwest Natural Gas or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Natural Gas vs. Umicore SA ADR
Performance |
| Timeline |
| Northwest Natural Gas |
| Umicore SA ADR |
Northwest Natural and Umicore SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Natural and Umicore SA
The main advantage of trading using opposite Northwest Natural and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural position performs unexpectedly, Umicore SA 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 Umicore SA will offset losses from the drop in Umicore SA's long position.| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
| Umicore SA vs. Eestech | Umicore SA vs. Energy and Water | Umicore SA vs. One World Universe | Umicore SA vs. Bion Environmental Technologies |
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 Stocks Directory module to find actively traded stocks across global markets.
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