Correlation Between World Oil and Steel Partners
Can any of the company-specific risk be diversified away by investing in both World Oil and Steel Partners 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 Steel Partners 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 Steel Partners Holdings, you can compare the effects of market volatilities on World Oil and Steel Partners 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 Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Oil and Steel Partners.
Diversification Opportunities for World Oil and Steel Partners
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between World and Steel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding World Oil Group and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of World Oil i.e., World Oil and Steel Partners go up and down completely randomly.
Pair Corralation between World Oil and Steel Partners
Given the investment horizon of 90 days World Oil Group is expected to under-perform the Steel Partners. In addition to that, World Oil is 2.86 times more volatile than Steel Partners Holdings. It trades about -0.08 of its total potential returns per unit of risk. Steel Partners Holdings is currently generating about -0.02 per unit of volatility. If you would invest 4,399 in Steel Partners Holdings on November 27, 2024 and sell it today you would lose (299.00) from holding Steel Partners Holdings or give up 6.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Oil Group vs. Steel Partners Holdings
Performance |
| Timeline |
| World Oil Group |
| Steel Partners Holdings |
World Oil and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Oil and Steel Partners
The main advantage of trading using opposite World Oil and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Oil position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| World Oil vs. NanoTech Gaming | World Oil vs. Games Workshop Group | World Oil vs. ChampionX | World Oil vs. Emerson Electric |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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