Correlation Between National Fuel and Cleanaway Waste

Can any of the company-specific risk be diversified away by investing in both National Fuel and Cleanaway Waste 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 National Fuel and Cleanaway Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Fuel Gas and Cleanaway Waste Management, you can compare the effects of market volatilities on National Fuel and Cleanaway Waste 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 National Fuel with a short position of Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Fuel and Cleanaway Waste.

Diversification Opportunities for National Fuel and Cleanaway Waste

-0.1

Correlation Coefficient

National Fuel  Cleanaway Waste

Good diversification

The 3 months correlation between National and Cleanaway is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana and National Fuel 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 National Fuel Gas are associated (or correlated) with Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of National Fuel i.e., National Fuel and Cleanaway Waste go up and down completely randomly.

Pair Corralation between National Fuel and Cleanaway Waste

Assuming the 90 days horizon National Fuel Gas is expected to generate 0.81 times more return on investment than Cleanaway Waste. However, National Fuel Gas is 1.24 times less risky than Cleanaway Waste. It trades about 0.05 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.01 per unit of risk. If you would invest  4,847  in National Fuel Gas on October 24, 2024 and sell it today you would earn a total of  1,803  from holding National Fuel Gas or generate 37.2% return on investment over 90 days.

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

National Fuel Gas  vs.  Cleanaway Waste Management

National Fuel Gas

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National Fuel Gas are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, National Fuel reported solid returns over the last few months and may actually be approaching a breakup point.

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Fuel and Cleanaway Waste

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

The idea behind National Fuel Gas and Cleanaway Waste Management 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.