Correlation Between Flexible Solutions and World Oil
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and World Oil 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 Flexible Solutions and World Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and World Oil Group, you can compare the effects of market volatilities on Flexible Solutions and World Oil 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 Flexible Solutions with a short position of World Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and World Oil.
Diversification Opportunities for Flexible Solutions and World Oil
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flexible and World is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and World Oil go up and down completely randomly.
Pair Corralation between Flexible Solutions and World Oil
Considering the 90-day investment horizon Flexible Solutions is expected to generate 2.5 times less return on investment than World Oil. But when comparing it to its historical volatility, Flexible Solutions International is 2.96 times less risky than World Oil. It trades about 0.12 of its potential returns per unit of risk. World Oil Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.31 in World Oil Group on September 2, 2024 and sell it today you would earn a total of 0.51 from holding World Oil Group or generate 38.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. World Oil Group
Performance |
| Timeline |
| Flexible Solutions |
| World Oil Group |
Flexible Solutions and World Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and World Oil
The main advantage of trading using opposite Flexible Solutions and World Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, World Oil 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 World Oil will offset losses from the drop in World Oil's long position.| Flexible Solutions vs. Orion Engineered Carbons | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Sociedad Quimica y | Flexible Solutions vs. Albemarle Corp |
| World Oil vs. United Parks Resorts | World Oil vs. Drilling Tools International | World Oil vs. Playtech plc | World Oil vs. Playtika Holding Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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