Correlation Between Naturgy Energy and EverGen Infrastructure

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

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

Diversification Opportunities for Naturgy Energy and EverGen Infrastructure

-0.81

Correlation Coefficient

Naturgy Energy  EverGen Infrastructure

Pay attention - limited upside

The 3 months correlation between Naturgy and EverGen is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy Energy Group and EverGen Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverGen Infrastructure and Naturgy 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 Naturgy Energy Group are associated (or correlated) with EverGen Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverGen Infrastructure has no effect on the direction of Naturgy Energy i.e., Naturgy Energy and EverGen Infrastructure go up and down completely randomly.

Pair Corralation between Naturgy Energy and EverGen Infrastructure

Assuming the 90 days horizon Naturgy Energy Group is expected to generate 0.24 times more return on investment than EverGen Infrastructure. However, Naturgy Energy Group is 4.21 times less risky than EverGen Infrastructure. It trades about 0.17 of its potential returns per unit of risk. EverGen Infrastructure Corp is currently generating about -0.08 per unit of risk. If you would invest  472.00  in Naturgy Energy Group on December 30, 2024 and sell it today you would earn a total of  76.00  from holding Naturgy Energy Group or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Naturgy Energy Group  vs.  EverGen Infrastructure Corp

Naturgy Energy Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naturgy Energy Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Naturgy Energy showed solid returns over the last few months and may actually be approaching a breakup point.

EverGen Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days EverGen Infrastructure Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Naturgy Energy and EverGen Infrastructure

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

The idea behind Naturgy Energy Group and EverGen Infrastructure Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.