Correlation Between National Retail and PENINSULA ENERG

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

By analyzing existing cross correlation between National Retail Properties and PENINSULA ENERG, you can compare the effects of market volatilities on National Retail and PENINSULA ENERG 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 National Retail with a short position of PENINSULA ENERG. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and PENINSULA ENERG.

Diversification Opportunities for National Retail and PENINSULA ENERG

0.57

Correlation Coefficient

National Retail  PENINSULA ENERG

Very weak diversification

The 3 months correlation between National and PENINSULA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG and National Retail 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 National Retail Properties are associated (or correlated) with PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of National Retail i.e., National Retail and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between National Retail and PENINSULA ENERG

Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the PENINSULA ENERG. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 7.39 times less risky than PENINSULA ENERG. The stock trades about -0.52 of its potential returns per unit of risk. The PENINSULA ENERG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  69.00  in PENINSULA ENERG on September 23, 2024 and sell it today you would earn a total of  8.00  from holding PENINSULA ENERG or generate 11.59% return on investment over 90 days.

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

National Retail Properties  vs.  PENINSULA ENERG

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Retail and PENINSULA ENERG

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

The idea behind National Retail Properties and PENINSULA ENERG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.