Correlation Between MicroSectorsTM Oil and United States
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil and United States 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 MicroSectorsTM Oil and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and United States Oil, you can compare the effects of market volatilities on MicroSectorsTM Oil and United States 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 MicroSectorsTM Oil with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and United States.
Diversification Opportunities for MicroSectorsTM Oil and United States
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectorsTM and United is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and United States go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and United States
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to under-perform the United States. In addition to that, MicroSectorsTM Oil is 2.07 times more volatile than United States Oil. It trades about -0.04 of its total potential returns per unit of risk. United States Oil is currently generating about 0.04 per unit of volatility. If you would invest 6,925 in United States Oil on January 19, 2024 and sell it today you would earn a total of 953.00 from holding United States Oil or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. United States Oil
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| United States Oil |
MicroSectorsTM Oil and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and United States
The main advantage of trading using opposite MicroSectorsTM Oil and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| MicroSectorsTM Oil vs. ProShares Ultra SP500 | MicroSectorsTM Oil vs. HUMANA INC | MicroSectorsTM Oil vs. Aquagold International | MicroSectorsTM Oil vs. Thrivent High Yield |
| United States vs. United States Natural | United States vs. SPDR Gold Shares | United States vs. ProShares Ultra Bloomberg | United States vs. Energy Select Sector |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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