Correlation Between National Fuel and Bedford Energy

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

Diversification Opportunities for National Fuel and Bedford Energy

0.0

Correlation Coefficient

National Fuel  Bedford Energy

Pay attention - limited upside

The 3 months correlation between National and Bedford is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Bedford Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bedford Energy 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 Bedford Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bedford Energy has no effect on the direction of National Fuel i.e., National Fuel and Bedford Energy go up and down completely randomly.

Pair Corralation between National Fuel and Bedford Energy

Considering the 90-day investment horizon National Fuel Gas is expected to generate 0.45 times more return on investment than Bedford Energy. However, National Fuel Gas is 2.25 times less risky than Bedford Energy. It trades about 0.01 of its potential returns per unit of risk. Bedford Energy is currently generating about -0.04 per unit of risk. If you would invest  5,667  in National Fuel Gas on September 21, 2024 and sell it today you would earn a total of  266.00  from holding National Fuel Gas or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

National Fuel Gas  vs.  Bedford Energy

National Fuel Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Fuel Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Fuel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bedford Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bedford Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Bedford Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Fuel and Bedford Energy

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

The idea behind National Fuel Gas and Bedford Energy 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.