Correlation Between World Oil and Alaska Power
Can any of the company-specific risk be diversified away by investing in both World Oil and Alaska Power 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 World Oil and Alaska Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Oil Group and Alaska Power Telephone, you can compare the effects of market volatilities on World Oil and Alaska Power 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 World Oil with a short position of Alaska Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Oil and Alaska Power.
Diversification Opportunities for World Oil and Alaska Power
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Alaska is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding World Oil Group and Alaska Power Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Power Telephone and World 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 World Oil Group are associated (or correlated) with Alaska Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Power Telephone has no effect on the direction of World Oil i.e., World Oil and Alaska Power go up and down completely randomly.
Pair Corralation between World Oil and Alaska Power
Given the investment horizon of 90 days World Oil Group is expected to generate 16.26 times more return on investment than Alaska Power. However, World Oil is 16.26 times more volatile than Alaska Power Telephone. It trades about 0.15 of its potential returns per unit of risk. Alaska Power Telephone is currently generating about 0.29 per unit of risk. If you would invest 1.59 in World Oil Group on August 31, 2024 and sell it today you would earn a total of 0.41 from holding World Oil Group or generate 25.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Oil Group vs. Alaska Power Telephone
Performance |
| Timeline |
| World Oil Group |
| Alaska Power Telephone |
World Oil and Alaska Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Oil and Alaska Power
The main advantage of trading using opposite World Oil and Alaska Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Oil position performs unexpectedly, Alaska Power 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 Alaska Power will offset losses from the drop in Alaska Power's long position.| World Oil vs. Valneva SE ADR | World Oil vs. Griffon | World Oil vs. Allient | World Oil vs. Flexible Solutions International |
| Alaska Power vs. Alliance Recovery | Alaska Power vs. Ayala | Alaska Power vs. Alliance Global Group | Alaska Power vs. RCABS Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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