Correlation Between Europe 125x and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Energy Fund 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 Europe 125x and Energy Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europe 125x Strategy and Energy Fund Investor, you can compare the effects of market volatilities on Europe 125x and Energy Fund 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 Europe 125x with a short position of Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Energy Fund.
Diversification Opportunities for Europe 125x and Energy Fund
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Europe and Energy is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Energy Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Investor and Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Investor has no effect on the direction of Europe 125x i.e., Europe 125x and Energy Fund go up and down completely randomly.
Pair Corralation between Europe 125x and Energy Fund
Assuming the 90 days horizon Europe 125x Strategy is expected to under-perform the Energy Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Europe 125x Strategy is 1.1 times less risky than Energy Fund. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Energy Fund Investor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 26,140 in Energy Fund Investor on September 1, 2024 and sell it today you would earn a total of 1,906 from holding Energy Fund Investor or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Energy Fund Investor
Performance |
| Timeline |
| Europe 125x Strategy |
| Energy Fund Investor |
Europe 125x and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Energy Fund
The main advantage of trading using opposite Europe 125x and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Europe 125x vs. Dow 2x Strategy | Europe 125x vs. Dow 2x Strategy | Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Ultramid Cap Profund Ultramid Cap |
| Energy Fund vs. Basic Materials Fund | Energy Fund vs. Electronics Fund Investor | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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