Correlation Between NYSE Composite and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Cheniere Energy 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 NYSE Composite and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cheniere Energy Partners, you can compare the effects of market volatilities on NYSE Composite and Cheniere Energy 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 NYSE Composite with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cheniere Energy.
Diversification Opportunities for NYSE Composite and Cheniere Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Cheniere is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and NYSE Composite 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 NYSE Composite are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of NYSE Composite i.e., NYSE Composite and Cheniere Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and Cheniere Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.29 times less return on investment than Cheniere Energy. But when comparing it to its historical volatility, NYSE Composite is 2.12 times less risky than Cheniere Energy. It trades about 0.13 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,847 in Cheniere Energy Partners on August 24, 2024 and sell it today you would earn a total of 511.00 from holding Cheniere Energy Partners or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Cheniere Energy Partners
Performance |
| Timeline |
NYSE Composite and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cheniere Energy Partners
Pair trading matchups for Cheniere Energy
Pair Trading with NYSE Composite and Cheniere Energy
The main advantage of trading using opposite NYSE Composite and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Williams Companies | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. ONEOK Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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