Correlation Between Natural Gas and Gencor Industries

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Can any of the company-specific risk be diversified away by investing in both Natural Gas and Gencor Industries 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 Natural Gas and Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Services and Gencor Industries, you can compare the effects of market volatilities on Natural Gas and Gencor Industries 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 Natural Gas with a short position of Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Gencor Industries.

Diversification Opportunities for Natural Gas and Gencor Industries

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Natural and Gencor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and Natural Gas 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 Natural Gas Services are associated (or correlated) with Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of Natural Gas i.e., Natural Gas and Gencor Industries go up and down completely randomly.

Pair Corralation between Natural Gas and Gencor Industries

Considering the 90-day investment horizon Natural Gas Services is expected to generate 0.94 times more return on investment than Gencor Industries. However, Natural Gas Services is 1.07 times less risky than Gencor Industries. It trades about 0.11 of its potential returns per unit of risk. Gencor Industries is currently generating about 0.06 per unit of risk. If you would invest  1,922  in Natural Gas Services on May 4, 2025 and sell it today you would earn a total of  407.00  from holding Natural Gas Services or generate 21.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Natural Gas Services  vs.  Gencor Industries

 Performance 
       Timeline  
Natural Gas Services 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Natural Gas Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Natural Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.
Gencor Industries 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gencor Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Gencor Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Natural Gas and Gencor Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Natural Gas and Gencor Industries

The main advantage of trading using opposite Natural Gas and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.
The idea behind Natural Gas Services and Gencor Industries 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.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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