Correlation Between Consumer Services and Short Oil
Can any of the company-specific risk be diversified away by investing in both Consumer Services 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 Consumer Services and Short Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Services Ultrasector and Short Oil Gas, you can compare the effects of market volatilities on Consumer Services 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 Consumer Services with a short position of Short Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Services and Short Oil.
Diversification Opportunities for Consumer Services and Short Oil
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Consumer and Short is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector 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 Consumer Services 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 Consumer Services Ultrasector 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 Consumer Services i.e., Consumer Services and Short Oil go up and down completely randomly.
Pair Corralation between Consumer Services and Short Oil
Assuming the 90 days horizon Consumer Services Ultrasector is expected to generate 1.46 times more return on investment than Short Oil. However, Consumer Services is 1.46 times more volatile than Short Oil Gas. It trades about 0.18 of its potential returns per unit of risk. Short Oil Gas is currently generating about -0.14 per unit of risk. If you would invest 6,377 in Consumer Services Ultrasector on August 30, 2024 and sell it today you would earn a total of 885.00 from holding Consumer Services Ultrasector or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Services Ultrasector vs. Short Oil Gas
Performance |
| Timeline |
| Consumer Services |
| Short Oil Gas |
Consumer Services and Short Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Services and Short Oil
The main advantage of trading using opposite Consumer Services and Short Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Services 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.| Consumer Services vs. Victory Tax Exempt Fund | Consumer Services vs. T Rowe Price | Consumer Services vs. Ab Value Fund | Consumer Services vs. Nova Fund Class |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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