Correlation Between UGI Corp and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both UGI Corp and OPAL Fuels 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 UGI Corp and OPAL Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corp Unit and OPAL Fuels, you can compare the effects of market volatilities on UGI Corp and OPAL Fuels 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 UGI Corp with a short position of OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI Corp and OPAL Fuels.
Diversification Opportunities for UGI Corp and OPAL Fuels
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UGI and OPAL is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp Unit and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels and UGI Corp 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 UGI Corp Unit are associated (or correlated) with OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of UGI Corp i.e., UGI Corp and OPAL Fuels go up and down completely randomly.
Pair Corralation between UGI Corp and OPAL Fuels
Given the investment horizon of 90 days UGI Corp Unit is expected to under-perform the OPAL Fuels. But the stock apears to be less risky and, when comparing its historical volatility, UGI Corp Unit is 1.86 times less risky than OPAL Fuels. The stock trades about -0.09 of its potential returns per unit of risk. The OPAL Fuels is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 699.00 in OPAL Fuels on August 30, 2024 and sell it today you would lose (332.00) from holding OPAL Fuels or give up 47.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.11% |
| Values | Daily Returns |
UGI Corp Unit vs. OPAL Fuels
Performance |
| Timeline |
| UGI Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| OPAL Fuels |
UGI Corp and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI Corp and OPAL Fuels
The main advantage of trading using opposite UGI Corp and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI Corp position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.The idea behind UGI Corp Unit and OPAL Fuels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey Resources |
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 Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |