Correlation Between Cheniere Energy and NFT

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

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

Diversification Opportunities for Cheniere Energy and NFT

-0.41

Correlation Coefficient

Cheniere Energy  NFT

Very good diversification

The 3 months correlation between Cheniere and NFT is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and NFT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Limited and Cheniere 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 Cheniere Energy Partners are associated (or correlated) with NFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Limited has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and NFT go up and down completely randomly.

Pair Corralation between Cheniere Energy and NFT

Considering the 90-day investment horizon Cheniere Energy is expected to generate 3.86 times less return on investment than NFT. But when comparing it to its historical volatility, Cheniere Energy Partners is 9.37 times less risky than NFT. It trades about 0.25 of its potential returns per unit of risk. NFT Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  369.00  in NFT Limited on September 2, 2024 and sell it today you would earn a total of  55.00  from holding NFT Limited or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cheniere Energy Partners  vs.  NFT Limited

Cheniere Energy Partners

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

NFT Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NFT Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, NFT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheniere Energy and NFT

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

The idea behind Cheniere Energy Partners and NFT Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.