Correlation Between World Oil and Matthews International
Can any of the company-specific risk be diversified away by investing in both World Oil and Matthews International 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 Matthews International 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 Matthews International, you can compare the effects of market volatilities on World Oil and Matthews International 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 Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Oil and Matthews International.
Diversification Opportunities for World Oil and Matthews International
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Matthews is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding World Oil Group and Matthews International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International 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 Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of World Oil i.e., World Oil and Matthews International go up and down completely randomly.
Pair Corralation between World Oil and Matthews International
Given the investment horizon of 90 days World Oil is expected to generate 1.49 times less return on investment than Matthews International. In addition to that, World Oil is 2.01 times more volatile than Matthews International. It trades about 0.09 of its total potential returns per unit of risk. Matthews International is currently generating about 0.27 per unit of volatility. If you would invest 2,329 in Matthews International on September 1, 2024 and sell it today you would earn a total of 687.00 from holding Matthews International or generate 29.5% 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. Matthews International
Performance |
| Timeline |
| World Oil Group |
| Matthews International |
World Oil and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Oil and Matthews International
The main advantage of trading using opposite World Oil and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Oil position performs unexpectedly, Matthews International 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 Matthews International will offset losses from the drop in Matthews International's long position.| World Oil vs. Flex | World Oil vs. Constellation Brands Class | World Oil vs. Compania Cervecerias Unidas | World Oil vs. Boston Beer |
| Matthews International vs. Steel Partners Holdings | Matthews International vs. Compass Diversified | Matthews International vs. Brookfield Business Partners | Matthews International vs. Tejon Ranch Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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