Correlation Between Verde Clean and Northwest Natural

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

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

Diversification Opportunities for Verde Clean and Northwest Natural

0.13

Correlation Coefficient

Verde Clean  Northwest Natural

Average diversification

The 3 months correlation between Verde and Northwest is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and Northwest Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Natural Gas and Verde Clean 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 Verde Clean Fuels are associated (or correlated) with Northwest Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Natural Gas has no effect on the direction of Verde Clean i.e., Verde Clean and Northwest Natural go up and down completely randomly.

Pair Corralation between Verde Clean and Northwest Natural

Given the investment horizon of 90 days Verde Clean Fuels is expected to under-perform the Northwest Natural. In addition to that, Verde Clean is 2.77 times more volatile than Northwest Natural Gas. It trades about -0.07 of its total potential returns per unit of risk. Northwest Natural Gas is currently generating about -0.09 per unit of volatility. If you would invest  4,342  in Northwest Natural Gas on May 7, 2025 and sell it today you would lose (322.00) from holding Northwest Natural Gas or give up 7.42% of portfolio value over 90 days.

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

Verde Clean Fuels  vs.  Northwest Natural Gas

Verde Clean Fuels

Risk-Adjusted Performance

Weakest

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Northwest Natural Gas

Risk-Adjusted Performance

Weakest

Over the last 90 days Northwest Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Verde Clean and Northwest Natural

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

The idea behind Verde Clean Fuels and Northwest Natural 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.