Correlation Between World Energy and City National
Can any of the company-specific risk be diversified away by investing in both World Energy and City National 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 City National 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 City National Rochdale, you can compare the effects of market volatilities on World Energy and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and City National.
Diversification Opportunities for World Energy and City National
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between World and City is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of World Energy i.e., World Energy and City National go up and down completely randomly.
Pair Corralation between World Energy and City National
Assuming the 90 days horizon World Energy Fund is expected to generate 4.81 times more return on investment than City National. However, World Energy is 4.81 times more volatile than City National Rochdale. It trades about 0.04 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.08 per unit of risk. If you would invest 1,204 in World Energy Fund on September 5, 2024 and sell it today you would earn a total of 324.00 from holding World Energy Fund or generate 26.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
World Energy Fund vs. City National Rochdale
Performance |
| Timeline |
| World Energy |
| City National Rochdale |
World Energy and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and City National
The main advantage of trading using opposite World Energy and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.| World Energy vs. Rationalpier 88 Convertible | World Energy vs. Lord Abbett Convertible | World Energy vs. Calamos Dynamic Convertible | World Energy vs. Putnam Convertible Incm Gwth |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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