Correlation Between Energy Services and Oil Gas
Can any of the company-specific risk be diversified away by investing in both Energy Services and Oil Gas 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 Services and Oil Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Oil Gas Ultrasector, you can compare the effects of market volatilities on Energy Services and Oil Gas 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 Services with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Oil Gas.
Diversification Opportunities for Energy Services and Oil Gas
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENERGY and Oil is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Energy Services 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 Services Fund are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Energy Services i.e., Energy Services and Oil Gas go up and down completely randomly.
Pair Corralation between Energy Services and Oil Gas
Assuming the 90 days horizon Energy Services is expected to generate 158.75 times less return on investment than Oil Gas. In addition to that, Energy Services is 1.04 times more volatile than Oil Gas Ultrasector. It trades about 0.0 of its total potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.04 per unit of volatility. If you would invest 3,489 in Oil Gas Ultrasector on September 1, 2024 and sell it today you would earn a total of 499.00 from holding Oil Gas Ultrasector or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Oil Gas Ultrasector
Performance |
| Timeline |
| Energy Services |
| Oil Gas Ultrasector |
Energy Services and Oil Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Oil Gas
The main advantage of trading using opposite Energy Services and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Oil Gas 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 Gas will offset losses from the drop in Oil Gas' long position.| Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund | Energy Services vs. Precious Metals Fund |
| Oil Gas vs. Oil Gas Ultrasector | Oil Gas vs. Ultramid Cap Profund Ultramid Cap | Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |