Correlation Between Navigator Holdings and Cheniere Energy

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

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

Diversification Opportunities for Navigator Holdings and Cheniere Energy

-0.44

Correlation Coefficient

Navigator Holdings  Cheniere Energy

Very good diversification

The 3 months correlation between Navigator and Cheniere is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Navigator Holdings 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 Navigator Holdings are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Navigator Holdings i.e., Navigator Holdings and Cheniere Energy go up and down completely randomly.

Pair Corralation between Navigator Holdings and Cheniere Energy

Given the investment horizon of 90 days Navigator Holdings is expected to under-perform the Cheniere Energy. But the stock apears to be less risky and, when comparing its historical volatility, Navigator Holdings is 1.08 times less risky than Cheniere Energy. The stock trades about -0.14 of its potential returns per unit of risk. The Cheniere Energy Partners is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,728  in Cheniere Energy Partners on September 19, 2024 and sell it today you would earn a total of  681.00  from holding Cheniere Energy Partners or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Navigator Holdings  vs.  Cheniere Energy Partners

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cheniere Energy Partners

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navigator Holdings and Cheniere Energy

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

The idea behind Navigator Holdings and Cheniere Energy Partners 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.