Correlation Between One Gas and NorthWestern

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

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

Diversification Opportunities for One Gas and NorthWestern

0.86

Correlation Coefficient

One Gas  NorthWestern

Very poor diversification

The 3 months correlation between One and NorthWestern is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern and One 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 One Gas are associated (or correlated) with NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of One Gas i.e., One Gas and NorthWestern go up and down completely randomly.

Pair Corralation between One Gas and NorthWestern

Considering the 90-day investment horizon One Gas is expected to under-perform the NorthWestern. In addition to that, One Gas is 1.2 times more volatile than NorthWestern. It trades about -0.12 of its total potential returns per unit of risk. NorthWestern is currently generating about -0.1 per unit of volatility. If you would invest  5,733  in NorthWestern on May 6, 2025 and sell it today you would lose (380.00) from holding NorthWestern or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

One Gas  vs.  NorthWestern

One Gas

Risk-Adjusted Performance

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NorthWestern

Risk-Adjusted Performance

Very Weak

Over the last 90 days NorthWestern has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with One Gas and NorthWestern

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

The idea behind One Gas and NorthWestern 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.