Correlation Between Energy Basic and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Energy Basic and Cambiar Opportunity 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 Basic and Cambiar Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Energy Basic and Cambiar Opportunity 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 Basic with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Cambiar Opportunity.
Diversification Opportunities for Energy Basic and Cambiar Opportunity
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Cambiar is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity and Energy Basic 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 Basic Materials are associated (or correlated) with Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Energy Basic i.e., Energy Basic and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Energy Basic and Cambiar Opportunity
Assuming the 90 days horizon Energy Basic Materials is expected to generate 0.97 times more return on investment than Cambiar Opportunity. However, Energy Basic Materials is 1.03 times less risky than Cambiar Opportunity. It trades about 0.11 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.06 per unit of risk. If you would invest 1,264 in Energy Basic Materials on August 25, 2024 and sell it today you would earn a total of 24.00 from holding Energy Basic Materials or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Basic Materials vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Energy Basic Materials |
| Cambiar Opportunity |
Energy Basic and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Cambiar Opportunity
The main advantage of trading using opposite Energy Basic and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic position performs unexpectedly, Cambiar Opportunity 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 Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.| Energy Basic vs. Putnam Convertible Incm Gwth | Energy Basic vs. Lord Abbett Vertible | Energy Basic vs. Fidelity Vertible Securities | Energy Basic vs. Mainstay Vertible Fund |
| Cambiar Opportunity vs. Short Oil Gas | Cambiar Opportunity vs. Energy Basic Materials | Cambiar Opportunity vs. Gmo Resources | Cambiar Opportunity vs. Clearbridge Energy Mlp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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