Correlation Between FLEX LNG and Southern California
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Southern California 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 FLEX LNG and Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Southern California Gas, you can compare the effects of market volatilities on FLEX LNG and Southern California 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 FLEX LNG with a short position of Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Southern California.
Diversification Opportunities for FLEX LNG and Southern California
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between FLEX and Southern is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Southern California Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California Gas and FLEX LNG 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 FLEX LNG are associated (or correlated) with Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California Gas has no effect on the direction of FLEX LNG i.e., FLEX LNG and Southern California go up and down completely randomly.
Pair Corralation between FLEX LNG and Southern California
Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Southern California. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 2.41 times less risky than Southern California. The stock trades about 0.0 of its potential returns per unit of risk. The Southern California Gas is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,350 in Southern California Gas on October 10, 2024 and sell it today you would earn a total of 292.00 from holding Southern California Gas or generate 12.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 89.52% |
Values | Daily Returns |
FLEX LNG vs. Southern California Gas
Performance |
Timeline |
FLEX LNG |
Southern California Gas |
FLEX LNG and Southern California Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FLEX LNG and Southern California
The main advantage of trading using opposite FLEX LNG and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
Southern California vs. Dynagas LNG Partners | Southern California vs. GasLog Partners LP | Southern California vs. GasLog Partners LP | Southern California vs. Genesis Energy LP |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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