Correlation Between American Funds and Oil Equipment
Can any of the company-specific risk be diversified away by investing in both American Funds and Oil Equipment 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 American Funds and Oil Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Government and Oil Equipment Services, you can compare the effects of market volatilities on American Funds and Oil Equipment 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 American Funds with a short position of Oil Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Oil Equipment.
Diversification Opportunities for American Funds and Oil Equipment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Oil is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and Oil Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Equipment Services and American Funds 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 American Funds Government are associated (or correlated) with Oil Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Equipment Services has no effect on the direction of American Funds i.e., American Funds and Oil Equipment go up and down completely randomly.
Pair Corralation between American Funds and Oil Equipment
If you would invest 9,040 in Oil Equipment Services on October 9, 2024 and sell it today you would earn a total of 131.00 from holding Oil Equipment Services or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Funds Government vs. Oil Equipment Services
Performance |
| Timeline |
| American Funds Government |
| Oil Equipment Services |
American Funds and Oil Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Oil Equipment
The main advantage of trading using opposite American Funds and Oil Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Oil Equipment 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 Oil Equipment will offset losses from the drop in Oil Equipment's long position.| American Funds vs. Ab Government Exchange | American Funds vs. Pioneer Money Market | American Funds vs. Ubs Money Series | American Funds vs. Schwab Government Money |
| Oil Equipment vs. Inverse Government Long | Oil Equipment vs. Elfun Government Money | Oil Equipment vs. Ridgeworth Seix Government | Oil Equipment vs. Ab Government Exchange |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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