Correlation Between Energy Fund and Global Resources
Can any of the company-specific risk be diversified away by investing in both Energy Fund and Global Resources 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 Energy Fund and Global Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Fund Investor and Global Resources Fund, you can compare the effects of market volatilities on Energy Fund and Global Resources 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 Energy Fund with a short position of Global Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fund and Global Resources.
Diversification Opportunities for Energy Fund and Global Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and GLOBAL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Investor and Global Resources Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Resources and Energy Fund 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 Energy Fund Investor are associated (or correlated) with Global Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Resources has no effect on the direction of Energy Fund i.e., Energy Fund and Global Resources go up and down completely randomly.
Pair Corralation between Energy Fund and Global Resources
Assuming the 90 days horizon Energy Fund Investor is expected to generate 1.24 times more return on investment than Global Resources. However, Energy Fund is 1.24 times more volatile than Global Resources Fund. It trades about 0.04 of its potential returns per unit of risk. Global Resources Fund is currently generating about 0.03 per unit of risk. If you would invest 27,137 in Energy Fund Investor on August 29, 2024 and sell it today you would earn a total of 778.00 from holding Energy Fund Investor or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Fund Investor vs. Global Resources Fund
Performance |
| Timeline |
| Energy Fund Investor |
| Global Resources |
Energy Fund and Global Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fund and Global Resources
The main advantage of trading using opposite Energy Fund and Global Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fund position performs unexpectedly, Global Resources 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 Resources will offset losses from the drop in Global Resources' long position.| Energy Fund vs. HUMANA INC | Energy Fund vs. Aquagold International | Energy Fund vs. Barloworld Ltd ADR | Energy Fund vs. Morningstar Unconstrained Allocation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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