Correlation Between Oil Gas and Small-cap Growth
Can any of the company-specific risk be diversified away by investing in both Oil Gas and Small-cap Growth 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 Small-cap Growth 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 Small Cap Growth Profund, you can compare the effects of market volatilities on Oil Gas and Small-cap Growth 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 Small-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Small-cap Growth.
Diversification Opportunities for Oil Gas and Small-cap Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oil and Small-cap is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Small Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Small-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Oil Gas i.e., Oil Gas and Small-cap Growth go up and down completely randomly.
Pair Corralation between Oil Gas and Small-cap Growth
Assuming the 90 days horizon Oil Gas is expected to generate 1.26 times less return on investment than Small-cap Growth. In addition to that, Oil Gas is 1.35 times more volatile than Small Cap Growth Profund. It trades about 0.05 of its total potential returns per unit of risk. Small Cap Growth Profund is currently generating about 0.09 per unit of volatility. If you would invest 9,341 in Small Cap Growth Profund on August 26, 2024 and sell it today you would earn a total of 2,861 from holding Small Cap Growth Profund or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. Small Cap Growth Profund
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Small Cap Growth |
Oil Gas and Small-cap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Small-cap Growth
The main advantage of trading using opposite Oil Gas and Small-cap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Small-cap Growth 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 Small-cap Growth will offset losses from the drop in Small-cap Growth'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 |
| Small-cap Growth vs. Small Cap Value Profund | Small-cap Growth vs. Mid Cap Growth Profund | Small-cap Growth vs. Mid Cap Value Profund | Small-cap Growth vs. Small Cap Profund Small Cap |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |