Correlation Between Oil and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Oil and Jubilee Life 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 Oil and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil and Gas and Jubilee Life Insurance, you can compare the effects of market volatilities on Oil and Jubilee Life 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 Oil with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil and Jubilee Life.
Diversification Opportunities for Oil and Jubilee Life
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oil and Jubilee is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oil and Gas and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and 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 Oil and Gas are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of Oil i.e., Oil and Jubilee Life go up and down completely randomly.
Pair Corralation between Oil and Jubilee Life
Assuming the 90 days trading horizon Oil and Gas is expected to generate 1.22 times more return on investment than Jubilee Life. However, Oil is 1.22 times more volatile than Jubilee Life Insurance. It trades about 0.09 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.03 per unit of risk. If you would invest 11,626 in Oil and Gas on September 5, 2024 and sell it today you would earn a total of 7,561 from holding Oil and Gas or generate 65.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.51% |
| Values | Daily Returns |
Oil and Gas vs. Jubilee Life Insurance
Performance |
| Timeline |
| Oil and Gas |
| Jubilee Life Insurance |
Oil and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil and Jubilee Life
The main advantage of trading using opposite Oil and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil position performs unexpectedly, Jubilee Life 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 Jubilee Life will offset losses from the drop in Jubilee Life's long position.The idea behind Oil and Gas and Jubilee Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Jubilee Life vs. Pakistan Tobacco | Jubilee Life vs. Aisha Steel Mills | Jubilee Life vs. Century Insurance | Jubilee Life vs. Sindh Modaraba Management |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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