Correlation Between Short Oil and Focused International
Can any of the company-specific risk be diversified away by investing in both Short Oil and Focused International 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 Short Oil and Focused International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Oil Gas and Focused International Growth, you can compare the effects of market volatilities on Short Oil and Focused International 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 Short Oil with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Focused International.
Diversification Opportunities for Short Oil and Focused International
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Short and Focused is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Short Oil 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 Short Oil Gas are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Short Oil i.e., Short Oil and Focused International go up and down completely randomly.
Pair Corralation between Short Oil and Focused International
Assuming the 90 days horizon Short Oil Gas is expected to under-perform the Focused International. In addition to that, Short Oil is 1.27 times more volatile than Focused International Growth. It trades about -0.04 of its total potential returns per unit of risk. Focused International Growth is currently generating about 0.02 per unit of volatility. If you would invest 1,595 in Focused International Growth on August 26, 2024 and sell it today you would earn a total of 75.00 from holding Focused International Growth or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Oil Gas vs. Focused International Growth
Performance |
| Timeline |
| Short Oil Gas |
| Focused International |
Short Oil and Focused International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and Focused International
The main advantage of trading using opposite Short Oil and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.| Short Oil vs. Legg Mason Partners | Short Oil vs. Usaa Mutual Funds | Short Oil vs. Dreyfus Institutional Reserves | Short Oil vs. Chestnut Street Exchange |
| Focused International vs. Jennison Natural Resources | Focused International vs. Short Oil Gas | Focused International vs. Franklin Natural Resources | Focused International vs. Icon Natural Resources |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |