Correlation Between NGL Energy and CHKEL Old

Can any of the company-specific risk be diversified away by investing in both NGL Energy and CHKEL Old 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 NGL Energy and CHKEL Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for NGL Energy and CHKEL Old

0.0

Correlation Coefficient

NGL Energy  CHKEL Old

Pay attention - limited upside

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

Pair Corralation between NGL Energy and CHKEL Old

If you would invest  2,316  in NGL Energy Partners on December 30, 2024 and sell it today you would earn a total of  88.00  from holding NGL Energy Partners or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NGL Energy Partners  vs.  CHKEL Old

NGL Energy Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NGL Energy Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, NGL Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CHKEL Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHKEL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, CHKEL Old is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with NGL Energy and CHKEL Old

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

The idea behind NGL Energy Partners and CHKEL Old 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.