Correlation Between Growth Fund and PHLX Oil
Can any of the company-specific risk be diversified away by investing in both Growth Fund and PHLX Oil 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 Growth Fund and PHLX Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and PHLX Oil Service, you can compare the effects of market volatilities on Growth Fund and PHLX Oil 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 Growth Fund with a short position of PHLX Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and PHLX Oil.
Diversification Opportunities for Growth Fund and PHLX Oil
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Growth and PHLX is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and PHLX Oil Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHLX Oil Service and Growth Fund 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 Growth Fund Of are associated (or correlated) with PHLX Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHLX Oil Service has no effect on the direction of Growth Fund i.e., Growth Fund and PHLX Oil go up and down completely randomly.
Pair Corralation between Growth Fund and PHLX Oil
Assuming the 90 days horizon Growth Fund is expected to generate 8.43 times less return on investment than PHLX Oil. But when comparing it to its historical volatility, Growth Fund Of is 1.21 times less risky than PHLX Oil. It trades about 0.08 of its potential returns per unit of risk. PHLX Oil Service is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 6,969 in PHLX Oil Service on October 23, 2024 and sell it today you would earn a total of 888.00 from holding PHLX Oil Service or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. PHLX Oil Service
Performance |
| Timeline |
Growth Fund and PHLX Oil Volatility Contrast
Predicted Return Density |
| Returns |
Growth Fund Of
Pair trading matchups for Growth Fund
PHLX Oil Service
Pair trading matchups for PHLX Oil
Pair Trading with Growth Fund and PHLX Oil
The main advantage of trading using opposite Growth Fund and PHLX Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, PHLX Oil 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 PHLX Oil will offset losses from the drop in PHLX Oil's long position.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
| PHLX Oil vs. Virgin Group Acquisition | PHLX Oil vs. Skechers USA | PHLX Oil vs. RBC Bearings Incorporated | PHLX Oil vs. Vindicator Silver Lead Mining |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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