Correlation Between NGL Energy and North American
Can any of the company-specific risk be diversified away by investing in both NGL Energy and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on NGL Energy and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and North American.
Diversification Opportunities for NGL Energy and North American
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NGL and North is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of NGL Energy i.e., NGL Energy and North American go up and down completely randomly.
Pair Corralation between NGL Energy and North American
Considering the 90-day investment horizon NGL Energy Partners is expected to generate 1.84 times more return on investment than North American. However, NGL Energy is 1.84 times more volatile than North American Construction. It trades about 0.24 of its potential returns per unit of risk. North American Construction is currently generating about 0.05 per unit of risk. If you would invest 536.00 in NGL Energy Partners on August 28, 2025 and sell it today you would earn a total of 449.00 from holding NGL Energy Partners or generate 83.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. North American Construction
Performance |
| Timeline |
| NGL Energy Partners |
| North American Const |
NGL Energy and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and North American
The main advantage of trading using opposite NGL Energy and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| NGL Energy vs. JB Hunt Transport | NGL Energy vs. Roadrunner Transportation Systems | NGL Energy vs. Gaztransport Technigaz SA | NGL Energy vs. Yuexiu Transport Infrastructure |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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