Correlation Between Strategic Enhanced and World Energy
Can any of the company-specific risk be diversified away by investing in both Strategic Enhanced and World Energy 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 Strategic Enhanced and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Enhanced Yield and World Energy Fund, you can compare the effects of market volatilities on Strategic Enhanced and World Energy 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 Strategic Enhanced with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Enhanced and World Energy.
Diversification Opportunities for Strategic Enhanced and World Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Strategic and World is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Enhanced Yield and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Strategic Enhanced 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 Strategic Enhanced Yield are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Strategic Enhanced i.e., Strategic Enhanced and World Energy go up and down completely randomly.
Pair Corralation between Strategic Enhanced and World Energy
Assuming the 90 days horizon Strategic Enhanced is expected to generate 3.13 times less return on investment than World Energy. But when comparing it to its historical volatility, Strategic Enhanced Yield is 3.87 times less risky than World Energy. It trades about 0.05 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,223 in World Energy Fund on August 31, 2024 and sell it today you would earn a total of 305.00 from holding World Energy Fund or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Enhanced Yield vs. World Energy Fund
Performance |
| Timeline |
| Strategic Enhanced Yield |
| World Energy |
Strategic Enhanced and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Enhanced and World Energy
The main advantage of trading using opposite Strategic Enhanced and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Enhanced position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.The idea behind Strategic Enhanced Yield and World Energy Fund 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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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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