Two Equities Correlation Analysis
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OILD
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for MicroSectorsTM Oil and NYSE Composite
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectorsTM and NYSE is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and MicroSectorsTM 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 MicroSectorsTM Oil Gas are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and NYSE Composite go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and NYSE Composite
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to under-perform the NYSE Composite. In addition to that, MicroSectorsTM Oil is 4.32 times more volatile than NYSE Composite. It trades about -0.27 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.1 per unit of volatility. If you would invest 1,677,949 in NYSE Composite on January 20, 2024 and sell it today you would earn a total of 60,860 from holding NYSE Composite or generate 3.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
MicroSectorsTM Oil Gas vs. NYSE Composite
Performance |
Timeline |
MicroSectorsTM Oil and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
MicroSectorsTM Oil Gas
Pair trading matchups for MicroSectorsTM Oil
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with MicroSectorsTM Oil and NYSE Composite
The main advantage of trading using opposite MicroSectorsTM Oil and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. MicroSectors Big Oil | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. Drum Income Plus |
NYSE Composite vs. Dine Brands Global | NYSE Composite vs. BJs Restaurants | NYSE Composite vs. Chipotle Mexican Grill | NYSE Composite vs. Shake Shack |
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