Correlation Between UGI Corp and One Gas

Can any of the company-specific risk be diversified away by investing in both UGI Corp and One Gas 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 One Gas 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 One Gas, you can compare the effects of market volatilities on UGI Corp and One Gas 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 One Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI Corp and One Gas.

Diversification Opportunities for UGI Corp and One Gas

-0.02

Correlation Coefficient

UGI Corp  One Gas

Good diversification

The 3 months correlation between UGI and One is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp Unit and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of UGI Corp i.e., UGI Corp and One Gas go up and down completely randomly.

Pair Corralation between UGI Corp and One Gas

Given the investment horizon of 90 days UGI Corp Unit is expected to under-perform the One Gas. In addition to that, UGI Corp is 1.05 times more volatile than One Gas. It trades about -0.02 of its total potential returns per unit of risk. One Gas is currently generating about -0.01 per unit of volatility. If you would invest  7,273  in One Gas on March 14, 2024 and sell it today you would lose (1,198) from holding One Gas or give up 16.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

UGI Corp Unit  vs.  One Gas

UGI Corp Unit

Risk-Adjusted Performance

0 of 100

Insignificant

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.

One Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UGI Corp and One Gas

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

The idea behind UGI Corp Unit and One Gas 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.