Correlation Between National Fuel and Lerøy Seafood

Can any of the company-specific risk be diversified away by investing in both National Fuel and Lerøy Seafood 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 Lerøy Seafood 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 Lery Seafood Group, you can compare the effects of market volatilities on National Fuel and Lerøy Seafood 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 Lerøy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Fuel and Lerøy Seafood.

Diversification Opportunities for National Fuel and Lerøy Seafood

0.56

Correlation Coefficient

National Fuel  Lerøy Seafood

Very weak diversification

The 3 months correlation between National and Lerøy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lerøy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of National Fuel i.e., National Fuel and Lerøy Seafood go up and down completely randomly.

Pair Corralation between National Fuel and Lerøy Seafood

Assuming the 90 days horizon National Fuel Gas is expected to generate 1.03 times more return on investment than Lerøy Seafood. However, National Fuel is 1.03 times more volatile than Lery Seafood Group. It trades about 0.24 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.09 per unit of risk. If you would invest  5,700  in National Fuel Gas on December 20, 2024 and sell it today you would earn a total of  1,550  from holding National Fuel Gas or generate 27.19% return on investment over 90 days.

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

National Fuel Gas  vs.  Lery Seafood Group

National Fuel Gas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Fuel Gas are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Fuel reported solid returns over the last few months and may actually be approaching a breakup point.

Lery Seafood Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lerøy Seafood may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with National Fuel and Lerøy Seafood

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

The idea behind National Fuel Gas and Lery Seafood Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.