Correlation Between One Gas and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both One Gas and NewJersey Resources 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 One Gas and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Gas and NewJersey Resources, you can compare the effects of market volatilities on One Gas and NewJersey Resources 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 One Gas with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Gas and NewJersey Resources.
Diversification Opportunities for One Gas and NewJersey Resources
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between One and NewJersey is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and One Gas 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 One Gas are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of One Gas i.e., One Gas and NewJersey Resources go up and down completely randomly.
Pair Corralation between One Gas and NewJersey Resources
Considering the 90-day investment horizon One Gas is expected to generate 0.92 times more return on investment than NewJersey Resources. However, One Gas is 1.09 times less risky than NewJersey Resources. It trades about -0.06 of its potential returns per unit of risk. NewJersey Resources is currently generating about -0.12 per unit of risk. If you would invest 7,275 in One Gas on November 18, 2024 and sell it today you would lose (122.00) from holding One Gas or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
One Gas vs. NewJersey Resources
Performance |
| Timeline |
| One Gas |
| NewJersey Resources |
One Gas and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One Gas and NewJersey Resources
The main advantage of trading using opposite One Gas and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Gas position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.| One Gas vs. Northwest Natural Gas | One Gas vs. Chesapeake Utilities | One Gas vs. NewJersey Resources | One Gas vs. RGC Resources |
| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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