Correlation Between UGI Corp and RGC Resources

Can any of the company-specific risk be diversified away by investing in both UGI Corp and RGC Resources 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 UGI Corp and RGC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UGI Corp Unit and RGC Resources, you can compare the effects of market volatilities on UGI Corp and RGC Resources 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 UGI Corp with a short position of RGC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI Corp and RGC Resources.

Diversification Opportunities for UGI Corp and RGC Resources

0.0

Correlation Coefficient

UGI Corp  RGC Resources

Pay attention - limited upside

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

Pair Corralation between UGI Corp and RGC Resources

If you would invest  2,012  in RGC Resources on December 26, 2024 and sell it today you would earn a total of  18.00  from holding RGC Resources or generate 0.89% return on investment over 90 days.

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

UGI Corp Unit  vs.  RGC Resources

UGI Corp Unit

Risk-Adjusted Performance

Very Weak

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

RGC Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RGC Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, RGC Resources is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UGI Corp and RGC Resources

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

The idea behind UGI Corp Unit and RGC Resources 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.