Correlation Between World Energy and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both World Energy and Stone Harbor 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 Stone Harbor 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 Stone Harbor Emerging, you can compare the effects of market volatilities on World Energy and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Stone Harbor.
Diversification Opportunities for World Energy and Stone Harbor
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between World and Stone is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of World Energy i.e., World Energy and Stone Harbor go up and down completely randomly.
Pair Corralation between World Energy and Stone Harbor
Assuming the 90 days horizon World Energy Fund is expected to generate 2.79 times more return on investment than Stone Harbor. However, World Energy is 2.79 times more volatile than Stone Harbor Emerging. It trades about 0.21 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.09 per unit of risk. If you would invest 1,291 in World Energy Fund on September 12, 2024 and sell it today you would earn a total of 208.00 from holding World Energy Fund or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
World Energy Fund vs. Stone Harbor Emerging
Performance |
| Timeline |
| World Energy |
| Stone Harbor Emerging |
World Energy and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Stone Harbor
The main advantage of trading using opposite World Energy and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| World Energy vs. Hennessy Bp Energy | World Energy vs. Franklin Natural Resources | World Energy vs. Icon Natural Resources | World Energy vs. Gamco Natural Resources |
| Stone Harbor vs. Ambrus Core Bond | Stone Harbor vs. Franklin High Yield | Stone Harbor vs. Artisan High Income | Stone Harbor vs. Alliancebernstein National Municipal |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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