Correlation Between Cheniere Energy and Excelerate Energy

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

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

Diversification Opportunities for Cheniere Energy and Excelerate Energy

-0.27

Correlation Coefficient

Cheniere Energy  Excelerate Energy

Very good diversification

The 3 months correlation between Cheniere and Excelerate is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy 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 Partners are associated (or correlated) with Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Excelerate Energy go up and down completely randomly.

Pair Corralation between Cheniere Energy and Excelerate Energy

Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.93 times more return on investment than Excelerate Energy. However, Cheniere Energy Partners is 1.08 times less risky than Excelerate Energy. It trades about 0.14 of its potential returns per unit of risk. Excelerate Energy is currently generating about -0.03 per unit of risk. If you would invest  5,290  in Cheniere Energy Partners on December 30, 2024 and sell it today you would earn a total of  1,104  from holding Cheniere Energy Partners or generate 20.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cheniere Energy Partners  vs.  Excelerate Energy

Cheniere Energy Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Excelerate Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excelerate Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Excelerate Energy 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 Excelerate Energy

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

The idea behind Cheniere Energy Partners and Excelerate Energy 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.