Correlation Between Excelerate Energy and New Fortress

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

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

Diversification Opportunities for Excelerate Energy and New Fortress

0.74

Correlation Coefficient

Excelerate Energy  New Fortress

Poor diversification

The 3 months correlation between Excelerate and New is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and New Fortress Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Fortress Energy and Excelerate 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 Excelerate Energy are associated (or correlated) with New Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Fortress Energy has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and New Fortress go up and down completely randomly.

Pair Corralation between Excelerate Energy and New Fortress

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 0.43 times more return on investment than New Fortress. However, Excelerate Energy is 2.31 times less risky than New Fortress. It trades about -0.01 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.03 per unit of risk. If you would invest  2,971  in Excelerate Energy on December 20, 2024 and sell it today you would lose (81.00) from holding Excelerate Energy or give up 2.73% of portfolio value over 90 days.

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

Excelerate Energy  vs.  New Fortress Energy

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.

New Fortress Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Fortress Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Excelerate Energy and New Fortress

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

The idea behind Excelerate Energy and New Fortress 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.