Correlation Between World Energy and Commodityrealreturn
Can any of the company-specific risk be diversified away by investing in both World Energy and Commodityrealreturn 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 Commodityrealreturn 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 Commodityrealreturn Strategy Fund, you can compare the effects of market volatilities on World Energy and Commodityrealreturn 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 Commodityrealreturn. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Commodityrealreturn.
Diversification Opportunities for World Energy and Commodityrealreturn
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between World and Commodityrealreturn is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Commodityrealreturn Strategy F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodityrealreturn 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 Commodityrealreturn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodityrealreturn has no effect on the direction of World Energy i.e., World Energy and Commodityrealreturn go up and down completely randomly.
Pair Corralation between World Energy and Commodityrealreturn
Assuming the 90 days horizon World Energy is expected to generate 6.59 times less return on investment than Commodityrealreturn. But when comparing it to its historical volatility, World Energy Fund is 7.52 times less risky than Commodityrealreturn. It trades about 0.04 of its potential returns per unit of risk. Commodityrealreturn Strategy Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Commodityrealreturn Strategy Fund on September 14, 2024 and sell it today you would earn a total of 136.00 from holding Commodityrealreturn Strategy Fund or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Commodityrealreturn Strategy F
Performance |
| Timeline |
| World Energy |
| Commodityrealreturn |
World Energy and Commodityrealreturn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Commodityrealreturn
The main advantage of trading using opposite World Energy and Commodityrealreturn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Commodityrealreturn 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 Commodityrealreturn will offset losses from the drop in Commodityrealreturn's long position.| World Energy vs. Siit Ultra Short | World Energy vs. Alpine Ultra Short | World Energy vs. Franklin Federal Limited Term | World Energy vs. Barings Active Short |
| Commodityrealreturn vs. Pimco Rae Worldwide | Commodityrealreturn vs. Pimco Rae Worldwide | Commodityrealreturn vs. Pimco Rae Worldwide | Commodityrealreturn vs. Pimco Rae Worldwide |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance |