Correlation Between NYSE Composite and Golar LNG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Golar LNG 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 Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Golar LNG Limited, you can compare the effects of market volatilities on NYSE Composite and Golar LNG 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 Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Golar LNG.
Diversification Opportunities for NYSE Composite and Golar LNG
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Golar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited 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 Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of NYSE Composite i.e., NYSE Composite and Golar LNG go up and down completely randomly.
Pair Corralation between NYSE Composite and Golar LNG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.42 times more return on investment than Golar LNG. However, NYSE Composite is 2.4 times less risky than Golar LNG. It trades about 0.21 of its potential returns per unit of risk. Golar LNG Limited is currently generating about 0.05 per unit of risk. If you would invest 1,911,944 in NYSE Composite on October 21, 2024 and sell it today you would earn a total of 48,793 from holding NYSE Composite or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Golar LNG Limited
Performance |
| Timeline |
NYSE Composite and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Golar LNG Limited
Pair trading matchups for Golar LNG
Pair Trading with NYSE Composite and Golar LNG
The main advantage of trading using opposite NYSE Composite and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Golar LNG 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 Golar LNG will offset losses from the drop in Golar LNG's long position.| NYSE Composite vs. National Health Investors | NYSE Composite vs. Arbor Realty Trust | NYSE Composite vs. Canaf Investments | NYSE Composite vs. Freedom Holding Corp |
| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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