Correlation Between New World and Short Oil
Can any of the company-specific risk be diversified away by investing in both New World and Short Oil 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 New World and Short Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Short Oil Gas, you can compare the effects of market volatilities on New World and Short Oil 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 New World with a short position of Short Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Short Oil.
Diversification Opportunities for New World and Short Oil
Good diversification
The 3 months correlation between New and Short is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas and New World 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 New World Fund are associated (or correlated) with Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of New World i.e., New World and Short Oil go up and down completely randomly.
Pair Corralation between New World and Short Oil
Assuming the 90 days horizon New World Fund is expected to generate 0.59 times more return on investment than Short Oil. However, New World Fund is 1.7 times less risky than Short Oil. It trades about -0.18 of its potential returns per unit of risk. Short Oil Gas is currently generating about -0.3 per unit of risk. If you would invest 8,359 in New World Fund on August 31, 2024 and sell it today you would lose (217.00) from holding New World Fund or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Short Oil Gas
Performance |
| Timeline |
| New World Fund |
| Short Oil Gas |
New World and Short Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Short Oil
The main advantage of trading using opposite New World and Short Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Short Oil 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 Short Oil will offset losses from the drop in Short Oil's long position.| New World vs. Global Technology Portfolio | New World vs. Janus Global Technology | New World vs. Allianzgi Technology Fund | New World vs. Biotechnology Fund Class |
| Short Oil vs. Short Precious Metals | Short Oil vs. Income Growth Fund | Short Oil vs. Loomis Sayles International | Short Oil vs. Walmart |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |