Correlation Between Short Oil and Global Bond
Can any of the company-specific risk be diversified away by investing in both Short Oil and Global Bond 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 Global Bond 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 Global Bond Fund, you can compare the effects of market volatilities on Short Oil and Global Bond 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 Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Global Bond.
Diversification Opportunities for Short Oil and Global Bond
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Short and Global is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund 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 Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Short Oil i.e., Short Oil and Global Bond go up and down completely randomly.
Pair Corralation between Short Oil and Global Bond
Assuming the 90 days horizon Short Oil Gas is expected to under-perform the Global Bond. In addition to that, Short Oil is 3.03 times more volatile than Global Bond Fund. It trades about -0.46 of its total potential returns per unit of risk. Global Bond Fund is currently generating about -0.04 per unit of volatility. If you would invest 847.00 in Global Bond Fund on October 25, 2024 and sell it today you would lose (2.00) from holding Global Bond Fund or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Oil Gas vs. Global Bond Fund
Performance |
| Timeline |
| Short Oil Gas |
| Global Bond Fund |
Short Oil and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and Global Bond
The main advantage of trading using opposite Short Oil and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, Global Bond 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 Bond will offset losses from the drop in Global Bond's long position.| Short Oil vs. Short Precious Metals | Short Oil vs. Short Oil Gas | Short Oil vs. Floating Rate Fund | Short Oil vs. GE Aerospace |
| Global Bond vs. Gmo Global Equity | Global Bond vs. Kinetics Global Fund | Global Bond vs. Aqr Global Macro | Global Bond vs. Barings Global Floating |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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