Correlation Between Tokyo Gas and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both Tokyo Gas and Naturgy 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 Tokyo Gas and Naturgy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Gas CoLtd and Naturgy Energy Group, you can compare the effects of market volatilities on Tokyo Gas and Naturgy 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 Tokyo Gas with a short position of Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Gas and Naturgy Energy.
Diversification Opportunities for Tokyo Gas and Naturgy Energy
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tokyo and Naturgy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Gas CoLtd and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group and Tokyo 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 Tokyo Gas CoLtd are associated (or correlated) with Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Tokyo Gas i.e., Tokyo Gas and Naturgy Energy go up and down completely randomly.
Pair Corralation between Tokyo Gas and Naturgy Energy
Assuming the 90 days horizon Tokyo Gas CoLtd is expected to under-perform the Naturgy Energy. In addition to that, Tokyo Gas is 1.42 times more volatile than Naturgy Energy Group. It trades about -0.09 of its total potential returns per unit of risk. Naturgy Energy Group is currently generating about -0.1 per unit of volatility. If you would invest 2,360 in Naturgy Energy Group on November 2, 2024 and sell it today you would lose (46.00) from holding Naturgy Energy Group or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tokyo Gas CoLtd vs. Naturgy Energy Group
Performance |
| Timeline |
| Tokyo Gas CoLtd |
| Naturgy Energy Group |
Tokyo Gas and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Gas and Naturgy Energy
The main advantage of trading using opposite Tokyo Gas and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Gas position performs unexpectedly, Naturgy 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 Naturgy Energy will offset losses from the drop in Naturgy Energy's long position.| Tokyo Gas vs. Atmos Energy | Tokyo Gas vs. China Resources Gas | Tokyo Gas vs. Superior Plus Corp | Tokyo Gas vs. Origin Agritech |
| Naturgy Energy vs. AECOM TECHNOLOGY | Naturgy Energy vs. United Airlines Holdings | Naturgy Energy vs. SOUTHWEST AIRLINES | Naturgy Energy vs. UPDATE SOFTWARE |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |