Correlation Between OPAL Fuels and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both OPAL Fuels 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 OPAL Fuels and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPAL Fuels and NewJersey Resources, you can compare the effects of market volatilities on OPAL Fuels 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 OPAL Fuels with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPAL Fuels and NewJersey Resources.
Diversification Opportunities for OPAL Fuels and NewJersey Resources
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between OPAL and NewJersey is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding OPAL Fuels and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and OPAL Fuels 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 OPAL Fuels 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 OPAL Fuels i.e., OPAL Fuels and NewJersey Resources go up and down completely randomly.
Pair Corralation between OPAL Fuels and NewJersey Resources
Given the investment horizon of 90 days OPAL Fuels is expected to under-perform the NewJersey Resources. In addition to that, OPAL Fuels is 1.62 times more volatile than NewJersey Resources. It trades about -0.13 of its total potential returns per unit of risk. NewJersey Resources is currently generating about 0.41 per unit of volatility. If you would invest 4,613 in NewJersey Resources on August 30, 2024 and sell it today you would earn a total of 548.00 from holding NewJersey Resources or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
OPAL Fuels vs. NewJersey Resources
Performance |
| Timeline |
| OPAL Fuels |
| NewJersey Resources |
OPAL Fuels and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPAL Fuels and NewJersey Resources
The main advantage of trading using opposite OPAL Fuels and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPAL Fuels 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.| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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