Correlation Between Cheniere Energy and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and MicroSectorsTM Oil 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 Cheniere Energy and MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on Cheniere Energy and MicroSectorsTM Oil 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 Cheniere Energy with a short position of MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and MicroSectorsTM Oil.
Diversification Opportunities for Cheniere Energy and MicroSectorsTM Oil
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheniere and MicroSectorsTM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas and Cheniere Energy 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 Cheniere Energy Partners are associated (or correlated) with MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between Cheniere Energy and MicroSectorsTM Oil
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.59 times more return on investment than MicroSectorsTM Oil. However, Cheniere Energy Partners is 1.69 times less risky than MicroSectorsTM Oil. It trades about -0.05 of its potential returns per unit of risk. MicroSectorsTM Oil Gas is currently generating about -0.2 per unit of risk. If you would invest 4,876 in Cheniere Energy Partners on January 26, 2024 and sell it today you would lose (79.00) from holding Cheniere Energy Partners or give up 1.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cheniere Energy Partners vs. MicroSectorsTM Oil Gas
Performance |
Timeline |
Cheniere Energy Partners |
MicroSectorsTM Oil Gas |
Cheniere Energy and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cheniere Energy and MicroSectorsTM Oil
The main advantage of trading using opposite Cheniere Energy and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, MicroSectorsTM Oil 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 MicroSectorsTM Oil will offset losses from the drop in MicroSectorsTM Oil's long position.Cheniere Energy vs. ONEOK Inc | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. Energy Transfer LP | Cheniere Energy vs. Plains All American |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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