Correlation Between Transportadora and National Fuel
Can any of the company-specific risk be diversified away by investing in both Transportadora and National Fuel 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 Transportadora and National Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and National Fuel Gas, you can compare the effects of market volatilities on Transportadora and National Fuel 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 Transportadora with a short position of National Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and National Fuel.
Diversification Opportunities for Transportadora and National Fuel
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transportadora and National is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas and Transportadora 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 Transportadora de Gas are associated (or correlated) with National Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of Transportadora i.e., Transportadora and National Fuel go up and down completely randomly.
Pair Corralation between Transportadora and National Fuel
Considering the 90-day investment horizon Transportadora de Gas is expected to generate 1.57 times more return on investment than National Fuel. However, Transportadora is 1.57 times more volatile than National Fuel Gas. It trades about 0.44 of its potential returns per unit of risk. National Fuel Gas is currently generating about 0.12 per unit of risk. If you would invest 2,216 in Transportadora de Gas on August 28, 2024 and sell it today you would earn a total of 688.00 from holding Transportadora de Gas or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. National Fuel Gas
Performance |
| Timeline |
| Transportadora de Gas |
| National Fuel Gas |
Transportadora and National Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and National Fuel
The main advantage of trading using opposite Transportadora and National Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, National Fuel 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 National Fuel will offset losses from the drop in National Fuel's long position.| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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