Correlation Between Oil Gas and Federated High
Can any of the company-specific risk be diversified away by investing in both Oil Gas and Federated High 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 Oil Gas and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Gas Ultrasector and Federated High Yield, you can compare the effects of market volatilities on Oil Gas and Federated High 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 Oil Gas with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Federated High.
Diversification Opportunities for Oil Gas and Federated High
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Federated is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Oil Gas 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 Oil Gas Ultrasector are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Oil Gas i.e., Oil Gas and Federated High go up and down completely randomly.
Pair Corralation between Oil Gas and Federated High
Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 6.94 times more return on investment than Federated High. However, Oil Gas is 6.94 times more volatile than Federated High Yield. It trades about 0.06 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.17 per unit of risk. If you would invest 3,207 in Oil Gas Ultrasector on September 2, 2024 and sell it today you would earn a total of 801.00 from holding Oil Gas Ultrasector or generate 24.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. Federated High Yield
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Federated High Yield |
Oil Gas and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Federated High
The main advantage of trading using opposite Oil Gas and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector | Oil Gas vs. Basic Materials Ultrasector | Oil Gas vs. Utilities Ultrasector Profund |
| Federated High vs. Firsthand Alternative Energy | Federated High vs. World Energy Fund | Federated High vs. Oil Gas Ultrasector | Federated High vs. Hennessy Bp Energy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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