Correlation Between Freedom Bank and Cheniere Energy

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

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

Diversification Opportunities for Freedom Bank and Cheniere Energy

0.09

Correlation Coefficient

Freedom Bank  Cheniere Energy

Significant diversification

The 3 months correlation between Freedom and Cheniere is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Freedom Bank i.e., Freedom Bank and Cheniere Energy go up and down completely randomly.

Pair Corralation between Freedom Bank and Cheniere Energy

Given the investment horizon of 90 days Freedom Bank is expected to generate 2.02 times less return on investment than Cheniere Energy. But when comparing it to its historical volatility, Freedom Bank of is 1.46 times less risky than Cheniere Energy. It trades about 0.06 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,780  in Cheniere Energy Partners on October 4, 2024 and sell it today you would earn a total of  685.00  from holding Cheniere Energy Partners or generate 14.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Freedom Bank of  vs.  Cheniere Energy Partners

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cheniere Energy Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Freedom Bank and Cheniere Energy

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

The idea behind Freedom Bank of and Cheniere Energy Partners 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.