Correlation Between Oil Gas and State Street
Can any of the company-specific risk be diversified away by investing in both Oil Gas and State Street 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 State Street 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 State Street Master, you can compare the effects of market volatilities on Oil Gas and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and State Street.
Diversification Opportunities for Oil Gas and State Street
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oil and State is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and State Street Master in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Master 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Master has no effect on the direction of Oil Gas i.e., Oil Gas and State Street go up and down completely randomly.
Pair Corralation between Oil Gas and State Street
Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 3.3 times more return on investment than State Street. However, Oil Gas is 3.3 times more volatile than State Street Master. It trades about 0.02 of its potential returns per unit of risk. State Street Master is currently generating about 0.03 per unit of risk. If you would invest 3,629 in Oil Gas Ultrasector on September 4, 2024 and sell it today you would earn a total of 359.00 from holding Oil Gas Ultrasector or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. State Street Master
Performance |
| Timeline |
| Oil Gas Ultrasector |
| State Street Master |
Oil Gas and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and State Street
The main advantage of trading using opposite Oil Gas and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Prudential Jennison Financial | State Street vs. Royce Global Financial | State Street vs. Transamerica Financial Life | State Street vs. Angel Oak Financial |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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