Correlation Between Excelerate Energy and Williams Companies

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

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

Diversification Opportunities for Excelerate Energy and Williams Companies

0.22

Correlation Coefficient

Excelerate Energy  Williams Companies

Modest diversification

The 3 months correlation between Excelerate and Williams is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and Williams Companies go up and down completely randomly.

Pair Corralation between Excelerate Energy and Williams Companies

Allowing for the 90-day total investment horizon Excelerate Energy is expected to under-perform the Williams Companies. In addition to that, Excelerate Energy is 1.19 times more volatile than Williams Companies. It trades about -0.06 of its total potential returns per unit of risk. Williams Companies is currently generating about -0.01 per unit of volatility. If you would invest  5,802  in Williams Companies on November 29, 2024 and sell it today you would lose (112.00) from holding Williams Companies or give up 1.93% of portfolio value over 90 days.

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

Excelerate Energy  vs.  Williams Companies

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 latest weak 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.

Williams Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Williams Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Williams Companies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Excelerate Energy and Williams Companies

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

The idea behind Excelerate Energy and Williams Companies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.