Correlation Between Intuitive Machines and South Jersey

Can any of the company-specific risk be diversified away by investing in both Intuitive Machines and South Jersey 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 Intuitive Machines and South Jersey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intuitive Machines and South Jersey Industries, you can compare the effects of market volatilities on Intuitive Machines and South Jersey 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 Intuitive Machines with a short position of South Jersey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Machines and South Jersey.

Diversification Opportunities for Intuitive Machines and South Jersey

-0.65

Correlation Coefficient

Intuitive Machines  South Jersey

Excellent diversification

The 3 months correlation between Intuitive and South is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and South Jersey go up and down completely randomly.

Pair Corralation between Intuitive Machines and South Jersey

Given the investment horizon of 90 days Intuitive Machines is expected to generate 45.79 times more return on investment than South Jersey. However, Intuitive Machines is 45.79 times more volatile than South Jersey Industries. It trades about 0.05 of its potential returns per unit of risk. South Jersey Industries is currently generating about -0.14 per unit of risk. If you would invest  1,001  in Intuitive Machines on September 18, 2024 and sell it today you would earn a total of  292.00  from holding Intuitive Machines or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	9.09%
Values	Daily Returns

Intuitive Machines  vs.  South Jersey Industries

Intuitive Machines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

South Jersey Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Jersey Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, South Jersey is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Intuitive Machines and South Jersey

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

The idea behind Intuitive Machines and South Jersey Industries 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.