Correlation Between Heating Oil and Five Year
Can any of the company-specific risk be diversified away by investing in both Heating Oil and Five Year 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 Heating Oil and Five Year into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heating Oil and Five Year Treasury Note, you can compare the effects of market volatilities on Heating Oil and Five Year 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 Heating Oil with a short position of Five Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heating Oil and Five Year.
Diversification Opportunities for Heating Oil and Five Year
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heating and Five is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Heating Oil and Five Year Treasury Note in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Year Treasury and Heating Oil 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 Heating Oil are associated (or correlated) with Five Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Year Treasury has no effect on the direction of Heating Oil i.e., Heating Oil and Five Year go up and down completely randomly.
Pair Corralation between Heating Oil and Five Year
Assuming the 90 days horizon Heating Oil is expected to under-perform the Five Year. In addition to that, Heating Oil is 6.4 times more volatile than Five Year Treasury Note. It trades about -0.01 of its total potential returns per unit of risk. Five Year Treasury Note is currently generating about 0.0 per unit of volatility. If you would invest 10,851 in Five Year Treasury Note on December 5, 2024 and sell it today you would lose (82.00) from holding Five Year Treasury Note or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heating Oil vs. Five Year Treasury Note
Performance |
| Timeline |
| Heating Oil |
| Five Year Treasury |
Heating Oil and Five Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heating Oil and Five Year
The main advantage of trading using opposite Heating Oil and Five Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heating Oil position performs unexpectedly, Five Year 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 Five Year will offset losses from the drop in Five Year's long position.| Heating Oil vs. Micro Gold Futures | ||
| Heating Oil vs. US Dollar | ||
| Heating Oil vs. Five Year Treasury Note | ||
| Heating Oil vs. Natural Gas |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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