Correlation Between Cheniere Energy and OFFICE DEPOT

Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and OFFICE DEPOT 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 Cheniere Energy and OFFICE DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cheniere Energy and OFFICE DEPOT, you can compare the effects of market volatilities on Cheniere Energy and OFFICE DEPOT 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 Cheniere Energy with a short position of OFFICE DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and OFFICE DEPOT.

Diversification Opportunities for Cheniere Energy and OFFICE DEPOT

0.0

Correlation Coefficient

Cheniere Energy  OFFICE DEPOT

Pay attention - limited upside

The 3 months correlation between Cheniere and OFFICE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy and OFFICE DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFFICE DEPOT and Cheniere Energy 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 Cheniere Energy are associated (or correlated) with OFFICE DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFFICE DEPOT has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and OFFICE DEPOT go up and down completely randomly.

Pair Corralation between Cheniere Energy and OFFICE DEPOT

If you would invest  18,530  in Cheniere Energy on October 7, 2024 and sell it today you would earn a total of  2,880  from holding Cheniere Energy or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Cheniere Energy  vs.  OFFICE DEPOT

Cheniere Energy

Risk-Adjusted Performance

15 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

OFFICE DEPOT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OFFICE DEPOT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, OFFICE DEPOT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cheniere Energy and OFFICE DEPOT

The main advantage of trading using opposite Cheniere Energy and OFFICE DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, OFFICE DEPOT 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 OFFICE DEPOT will offset losses from the drop in OFFICE DEPOT's long position.

The idea behind Cheniere Energy and OFFICE DEPOT 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.