Correlation Between World Energy and Short Oil
Can any of the company-specific risk be diversified away by investing in both World Energy and Short 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 World Energy and Short Oil 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 Short Oil Gas, you can compare the effects of market volatilities on World Energy and Short 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 World Energy with a short position of Short Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Short Oil.
Diversification Opportunities for World Energy and Short Oil
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between World and Short is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas 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 Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of World Energy i.e., World Energy and Short Oil go up and down completely randomly.
Pair Corralation between World Energy and Short Oil
Assuming the 90 days horizon World Energy Fund is expected to generate 1.1 times more return on investment than Short Oil. However, World Energy is 1.1 times more volatile than Short Oil Gas. It trades about 0.38 of its potential returns per unit of risk. Short Oil Gas is currently generating about -0.31 per unit of risk. If you would invest 1,423 in World Energy Fund on August 25, 2024 and sell it today you would earn a total of 144.00 from holding World Energy Fund or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
World Energy Fund vs. Short Oil Gas
Performance |
| Timeline |
| World Energy |
| Short Oil Gas |
World Energy and Short Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Short Oil
The main advantage of trading using opposite World Energy and Short Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Short 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 Short Oil will offset losses from the drop in Short Oil's long position.| World Energy vs. Small Cap Value | World Energy vs. Kinetics Small Cap | World Energy vs. Artisan Small Cap | World Energy vs. Chartwell Small Cap |
| Short Oil vs. Legg Mason Partners | Short Oil vs. Usaa Mutual Funds | Short Oil vs. Dreyfus Institutional Reserves | Short Oil vs. Chestnut Street Exchange |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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