Correlation Between Otto Energy and Global Masters
Can any of the company-specific risk be diversified away by investing in both Otto Energy and Global Masters 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 Otto Energy and Global Masters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otto Energy and Global Masters, you can compare the effects of market volatilities on Otto Energy and Global Masters 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 Otto Energy with a short position of Global Masters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otto Energy and Global Masters.
Diversification Opportunities for Otto Energy and Global Masters
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Otto and Global is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Otto Energy and Global Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Masters and Otto Energy 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 Otto Energy are associated (or correlated) with Global Masters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Masters has no effect on the direction of Otto Energy i.e., Otto Energy and Global Masters go up and down completely randomly.
Pair Corralation between Otto Energy and Global Masters
Assuming the 90 days trading horizon Otto Energy is expected to generate 6.72 times more return on investment than Global Masters. However, Otto Energy is 6.72 times more volatile than Global Masters. It trades about 0.09 of its potential returns per unit of risk. Global Masters is currently generating about 0.17 per unit of risk. If you would invest 1.10 in Otto Energy on September 1, 2024 and sell it today you would earn a total of 0.10 from holding Otto Energy or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Otto Energy vs. Global Masters
Performance |
| Timeline |
| Otto Energy |
| Global Masters |
Otto Energy and Global Masters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otto Energy and Global Masters
The main advantage of trading using opposite Otto Energy and Global Masters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otto Energy position performs unexpectedly, Global Masters 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 Global Masters will offset losses from the drop in Global Masters' long position.| Otto Energy vs. Aurelia Metals | Otto Energy vs. Centaurus Metals | Otto Energy vs. Macquarie Technology Group | Otto Energy vs. Lendlease Group |
| Global Masters vs. Mayfield Childcare | Global Masters vs. Skycity Entertainment Group | Global Masters vs. Toys R Us | Global Masters vs. RLF AgTech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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