Correlation Between Oil Gas and Nasdaq-100 Profund
Can any of the company-specific risk be diversified away by investing in both Oil Gas and Nasdaq-100 Profund 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 Nasdaq-100 Profund 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 Nasdaq 100 Profund Nasdaq 100, you can compare the effects of market volatilities on Oil Gas and Nasdaq-100 Profund 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 Nasdaq-100 Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Nasdaq-100 Profund.
Diversification Opportunities for Oil Gas and Nasdaq-100 Profund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Nasdaq-100 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Nasdaq 100 Profund Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Profund 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 Nasdaq-100 Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Profund has no effect on the direction of Oil Gas i.e., Oil Gas and Nasdaq-100 Profund go up and down completely randomly.
Pair Corralation between Oil Gas and Nasdaq-100 Profund
Assuming the 90 days horizon Oil Gas is expected to generate 1.15 times less return on investment than Nasdaq-100 Profund. In addition to that, Oil Gas is 1.5 times more volatile than Nasdaq 100 Profund Nasdaq 100. It trades about 0.05 of its total potential returns per unit of risk. Nasdaq 100 Profund Nasdaq 100 is currently generating about 0.09 per unit of volatility. If you would invest 2,699 in Nasdaq 100 Profund Nasdaq 100 on August 27, 2024 and sell it today you would earn a total of 720.00 from holding Nasdaq 100 Profund Nasdaq 100 or generate 26.68% 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. Nasdaq 100 Profund Nasdaq 100
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Nasdaq 100 Profund |
Oil Gas and Nasdaq-100 Profund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Nasdaq-100 Profund
The main advantage of trading using opposite Oil Gas and Nasdaq-100 Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Nasdaq-100 Profund 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 Nasdaq-100 Profund will offset losses from the drop in Nasdaq-100 Profund'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. Fidelity Advisor 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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