Correlation Between World Energy and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both World Energy and Strategic Asset 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 Strategic Asset 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 Strategic Asset Management, you can compare the effects of market volatilities on World Energy and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Strategic Asset.
Diversification Opportunities for World Energy and Strategic Asset
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between World and Strategic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of World Energy i.e., World Energy and Strategic Asset go up and down completely randomly.
Pair Corralation between World Energy and Strategic Asset
Assuming the 90 days horizon World Energy Fund is expected to generate 1.31 times more return on investment than Strategic Asset. However, World Energy is 1.31 times more volatile than Strategic Asset Management. It trades about 0.62 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.17 per unit of risk. If you would invest 1,409 in World Energy Fund on October 20, 2024 and sell it today you would earn a total of 152.00 from holding World Energy Fund or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Strategic Asset Management
Performance |
| Timeline |
| World Energy |
| Strategic Asset Mana |
World Energy and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Strategic Asset
The main advantage of trading using opposite World Energy and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset's long position.| World Energy vs. Calvert Large Cap | World Energy vs. Americafirst Large Cap | World Energy vs. Qs Large Cap | World Energy vs. Smead Value Fund |
| Strategic Asset vs. Ab Small Cap | Strategic Asset vs. Rbc Small Cap | Strategic Asset vs. Lebenthal Lisanti Small | Strategic Asset vs. Glg Intl Small |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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