Correlation Between Energy Fund and Electronics Fund
Can any of the company-specific risk be diversified away by investing in both Energy Fund and Electronics 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 Energy Fund and Electronics Fund 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 Electronics Fund Investor, you can compare the effects of market volatilities on Energy Fund and Electronics 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 Energy Fund with a short position of Electronics Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fund and Electronics Fund.
Diversification Opportunities for Energy Fund and Electronics Fund
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energy and Electronics is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Investor and Electronics Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Fund Investor 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 Electronics Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Fund Investor has no effect on the direction of Energy Fund i.e., Energy Fund and Electronics Fund go up and down completely randomly.
Pair Corralation between Energy Fund and Electronics Fund
Assuming the 90 days horizon Energy Fund is expected to generate 4.08 times less return on investment than Electronics Fund. But when comparing it to its historical volatility, Energy Fund Investor is 1.49 times less risky than Electronics Fund. It trades about 0.02 of its potential returns per unit of risk. Electronics Fund Investor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 26,056 in Electronics Fund Investor on September 3, 2024 and sell it today you would earn a total of 16,188 from holding Electronics Fund Investor or generate 62.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Fund Investor vs. Electronics Fund Investor
Performance |
| Timeline |
| Energy Fund Investor |
| Electronics Fund Investor |
Energy Fund and Electronics Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fund and Electronics Fund
The main advantage of trading using opposite Energy Fund and Electronics Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fund position performs unexpectedly, Electronics 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 Electronics Fund will offset losses from the drop in Electronics Fund's long position.| Energy Fund vs. Energy Services Fund | Energy Fund vs. Basic Materials Fund | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
| Electronics Fund vs. Technology Fund Investor | Electronics Fund vs. Financial Services Fund | Electronics Fund vs. Telecommunications Fund Investor | Electronics Fund vs. Health Care 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |