Correlation Between US GASOLINE and Select Sector
Can any of the company-specific risk be diversified away by investing in both US GASOLINE and Select Sector 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 US GASOLINE and Select Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US GASOLINE FUND and The Select Sector, you can compare the effects of market volatilities on US GASOLINE and Select Sector 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 US GASOLINE with a short position of Select Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GASOLINE and Select Sector.
Diversification Opportunities for US GASOLINE and Select Sector
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UGA and Select is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US GASOLINE FUND and The Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Sector and US GASOLINE 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 US GASOLINE FUND are associated (or correlated) with Select Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Sector has no effect on the direction of US GASOLINE i.e., US GASOLINE and Select Sector go up and down completely randomly.
Pair Corralation between US GASOLINE and Select Sector
If you would invest 184,671 in The Select Sector on September 22, 2024 and sell it today you would earn a total of 85,329 from holding The Select Sector or generate 46.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
US GASOLINE FUND vs. The Select Sector
Performance |
| Timeline |
| US GASOLINE FUND |
| Select Sector |
US GASOLINE and Select Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US GASOLINE and Select Sector
The main advantage of trading using opposite US GASOLINE and Select Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US GASOLINE position performs unexpectedly, Select Sector 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 Select Sector will offset losses from the drop in Select Sector's long position.| US GASOLINE vs. iShares Trust | US GASOLINE vs. Vanguard Funds Public | US GASOLINE vs. Vanguard Specialized Funds | US GASOLINE vs. First Trust Developed |
| Select Sector vs. Vanguard Index Funds | Select Sector vs. Vanguard Index Funds | Select Sector vs. Vanguard STAR Funds | Select Sector vs. SPDR SP 500 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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