Correlation Between Oil Gas and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Oil Gas and Nebraska Municipal 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 Nebraska Municipal 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 Nebraska Municipal Fund, you can compare the effects of market volatilities on Oil Gas and Nebraska Municipal 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 Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Nebraska Municipal.
Diversification Opportunities for Oil Gas and Nebraska Municipal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oil and Nebraska is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal 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 Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Oil Gas i.e., Oil Gas and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Oil Gas and Nebraska Municipal
Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 4.92 times more return on investment than Nebraska Municipal. However, Oil Gas is 4.92 times more volatile than Nebraska Municipal Fund. It trades about 0.29 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.25 per unit of risk. If you would invest 3,605 in Oil Gas Ultrasector on September 1, 2024 and sell it today you would earn a total of 383.00 from holding Oil Gas Ultrasector or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Nebraska Municipal |
Oil Gas and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Nebraska Municipal
The main advantage of trading using opposite Oil Gas and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Nebraska Municipal 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Oil Gas vs. Oil Gas Ultrasector | Oil Gas vs. Ultramid Cap Profund Ultramid Cap | Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector |
| Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Integrity Dividend Summit | Nebraska Municipal vs. Integrity Dividend Summit |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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