Correlation Between World Energy and Chase Growth
Can any of the company-specific risk be diversified away by investing in both World Energy and Chase Growth 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 World Energy and Chase Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Chase Growth Fund, you can compare the effects of market volatilities on World Energy and Chase Growth 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 World Energy with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Chase Growth.
Diversification Opportunities for World Energy and Chase Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between World and Chase is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth and World Energy 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 World Energy Fund are associated (or correlated) with Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of World Energy i.e., World Energy and Chase Growth go up and down completely randomly.
Pair Corralation between World Energy and Chase Growth
Assuming the 90 days horizon World Energy is expected to generate 1.16 times less return on investment than Chase Growth. In addition to that, World Energy is 1.26 times more volatile than Chase Growth Fund. It trades about 0.08 of its total potential returns per unit of risk. Chase Growth Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,672 in Chase Growth Fund on September 3, 2024 and sell it today you would earn a total of 249.00 from holding Chase Growth Fund or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Chase Growth Fund
Performance |
| Timeline |
| World Energy |
| Chase Growth |
World Energy and Chase Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Chase Growth
The main advantage of trading using opposite World Energy and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Chase Growth 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 Chase Growth will offset losses from the drop in Chase Growth's long position.| World Energy vs. Fisher Small Cap | World Energy vs. Rbc Small Cap | World Energy vs. Us Small Cap | World Energy vs. Oklahoma College Savings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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