Correlation Between Palfinger and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Palfinger and NRG 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 Palfinger and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palfinger AG and NRG Energy, you can compare the effects of market volatilities on Palfinger and NRG 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 Palfinger with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palfinger and NRG Energy.
Diversification Opportunities for Palfinger and NRG Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Palfinger and NRG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Palfinger AG and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Palfinger 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 Palfinger AG are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Palfinger i.e., Palfinger and NRG Energy go up and down completely randomly.
Pair Corralation between Palfinger and NRG Energy
Assuming the 90 days horizon Palfinger AG is expected to under-perform the NRG Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Palfinger AG is 1.27 times less risky than NRG Energy. The pink sheet trades about -0.22 of its potential returns per unit of risk. The NRG Energy is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8,805 in NRG Energy on September 4, 2024 and sell it today you would earn a total of 1,135 from holding NRG Energy or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palfinger AG vs. NRG Energy
Performance |
| Timeline |
| Palfinger AG |
| NRG Energy |
Palfinger and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palfinger and NRG Energy
The main advantage of trading using opposite Palfinger and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palfinger position performs unexpectedly, NRG 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Palfinger vs. Volvo AB ADR | Palfinger vs. Deere Company | Palfinger vs. Deutsche Post AG | Palfinger vs. VINCI SA |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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