Correlation Between New Fortress and RGC Resources

Can any of the company-specific risk be diversified away by investing in both New Fortress and RGC Resources 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 New Fortress and RGC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for New Fortress and RGC Resources

-0.36

Correlation Coefficient

New Fortress  RGC Resources

Very good diversification

The 3 months correlation between New and RGC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Fortress Energy and RGC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RGC Resources and New Fortress 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 New Fortress Energy are associated (or correlated) with RGC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RGC Resources has no effect on the direction of New Fortress i.e., New Fortress and RGC Resources go up and down completely randomly.

Pair Corralation between New Fortress and RGC Resources

Considering the 90-day investment horizon New Fortress Energy is expected to generate 2.25 times more return on investment than RGC Resources. However, New Fortress is 2.25 times more volatile than RGC Resources. It trades about 0.27 of its potential returns per unit of risk. RGC Resources is currently generating about -0.16 per unit of risk. If you would invest  959.00  in New Fortress Energy on October 7, 2024 and sell it today you would earn a total of  631.00  from holding New Fortress Energy or generate 65.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

New Fortress Energy  vs.  RGC Resources

New Fortress Energy

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Fortress Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New Fortress exhibited solid returns over the last few months and may actually be approaching a breakup point.

RGC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with New Fortress and RGC Resources

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

The idea behind New Fortress Energy and RGC Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.