Correlation Between Short Oil and Steward International
Can any of the company-specific risk be diversified away by investing in both Short Oil and Steward 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 Steward 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 Steward International Enhanced, you can compare the effects of market volatilities on Short Oil and Steward 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 Steward International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Steward International.
Diversification Opportunities for Short Oil and Steward International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Short and Steward is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward 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 Steward International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward International has no effect on the direction of Short Oil i.e., Short Oil and Steward International go up and down completely randomly.
Pair Corralation between Short Oil and Steward International
Assuming the 90 days horizon Short Oil Gas is expected to generate 2.37 times more return on investment than Steward International. However, Short Oil is 2.37 times more volatile than Steward International Enhanced. It trades about 0.3 of its potential returns per unit of risk. Steward International Enhanced is currently generating about 0.46 per unit of risk. If you would invest 1,362 in Short Oil Gas on September 14, 2024 and sell it today you would earn a total of 78.00 from holding Short Oil Gas or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Oil Gas vs. Steward International Enhanced
Performance |
| Timeline |
| Short Oil Gas |
| Steward International |
Short Oil and Steward International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and Steward International
The main advantage of trading using opposite Short Oil and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, Steward 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 Steward International will offset losses from the drop in Steward International's long position.| Short Oil vs. Americafirst Large Cap | Short Oil vs. Avantis Large Cap | Short Oil vs. Jhancock Disciplined Value | Short Oil vs. M Large Cap |
| Steward International vs. Icon Natural Resources | Steward International vs. Short Oil Gas | Steward International vs. Hennessy Bp Energy | Steward International vs. Invesco Energy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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