Correlation Between Cheniere Energy and Euronav NV

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

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

Diversification Opportunities for Cheniere Energy and Euronav NV

0.7

Correlation Coefficient

Cheniere Energy  Euronav NV

Poor diversification

The 3 months correlation between Cheniere and Euronav is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy and Euronav NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronav NV and Cheniere 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 Cheniere Energy are associated (or correlated) with Euronav NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronav NV has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Euronav NV go up and down completely randomly.

Pair Corralation between Cheniere Energy and Euronav NV

If you would invest  17,939  in Cheniere Energy on September 30, 2024 and sell it today you would earn a total of  3,109  from holding Cheniere Energy or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Cheniere Energy  vs.  Euronav NV

Cheniere Energy

Risk-Adjusted Performance

13 of 100

Good

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

Euronav NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euronav NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Euronav NV is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cheniere Energy and Euronav NV

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

The idea behind Cheniere Energy and Euronav NV 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.