Correlation Between Brent Crude and SPECTRA
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By analyzing existing cross correlation between Brent Crude Oil and SPECTRA ENERGY PARTNERS, you can compare the effects of market volatilities on Brent Crude and SPECTRA 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 Brent Crude with a short position of SPECTRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brent Crude and SPECTRA.
Diversification Opportunities for Brent Crude and SPECTRA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brent and SPECTRA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Brent Crude Oil and SPECTRA ENERGY PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRA ENERGY PARTNERS and Brent Crude 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 Brent Crude Oil are associated (or correlated) with SPECTRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRA ENERGY PARTNERS has no effect on the direction of Brent Crude i.e., Brent Crude and SPECTRA go up and down completely randomly.
Pair Corralation between Brent Crude and SPECTRA
Assuming the 90 days horizon Brent Crude Oil is expected to generate 2.64 times more return on investment than SPECTRA. However, Brent Crude is 2.64 times more volatile than SPECTRA ENERGY PARTNERS. It trades about 0.39 of its potential returns per unit of risk. SPECTRA ENERGY PARTNERS is currently generating about -0.27 per unit of risk. If you would invest 7,256 in Brent Crude Oil on October 21, 2024 and sell it today you would earn a total of 697.00 from holding Brent Crude Oil or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Brent Crude Oil vs. SPECTRA ENERGY PARTNERS
Performance |
| Timeline |
| Brent Crude Oil |
| SPECTRA ENERGY PARTNERS |
Brent Crude and SPECTRA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brent Crude and SPECTRA
The main advantage of trading using opposite Brent Crude and SPECTRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brent Crude position performs unexpectedly, SPECTRA 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 SPECTRA will offset losses from the drop in SPECTRA's long position.| Brent Crude vs. Oat Futures | Brent Crude vs. Class III Milk | Brent Crude vs. Soybean Meal Futures | Brent Crude vs. Micro Gold Futures |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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