Correlation Between World Oil and NN
Can any of the company-specific risk be diversified away by investing in both World Oil and NN 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 NN 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 NN Inc, you can compare the effects of market volatilities on World Oil and NN 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 NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Oil and NN.
Diversification Opportunities for World Oil and NN
Average diversification
The 3 months correlation between World and NN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding World Oil Group and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of World Oil i.e., World Oil and NN go up and down completely randomly.
Pair Corralation between World Oil and NN
Given the investment horizon of 90 days World Oil Group is expected to generate 1.85 times more return on investment than NN. However, World Oil is 1.85 times more volatile than NN Inc. It trades about 0.15 of its potential returns per unit of risk. NN Inc is currently generating about 0.03 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Oil Group vs. NN Inc
Performance |
| Timeline |
| World Oil Group |
| NN Inc |
World Oil and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Oil and NN
The main advantage of trading using opposite World Oil and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Oil position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| World Oil vs. Valneva SE ADR | World Oil vs. Griffon | World Oil vs. Allient | World Oil vs. Flexible Solutions International |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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