Correlation Between SFL and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both SFL 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 SFL and MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on SFL 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 SFL with a short position of MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and MicroSectorsTM Oil.
Diversification Opportunities for SFL and MicroSectorsTM Oil
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SFL and MicroSectorsTM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. 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 SFL 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 SFL Corporation 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 SFL i.e., SFL and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between SFL and MicroSectorsTM Oil
Considering the 90-day investment horizon SFL Corporation is expected to generate 0.46 times more return on investment than MicroSectorsTM Oil. However, SFL Corporation is 2.18 times less risky than MicroSectorsTM Oil. It trades about -0.01 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 1,308 in SFL Corporation on January 26, 2024 and sell it today you would lose (5.00) from holding SFL Corporation or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFL Corp. vs. MicroSectorsTM Oil Gas
Performance |
| Timeline |
| SFL Corporation |
| MicroSectorsTM Oil Gas |
SFL and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and MicroSectorsTM Oil
The main advantage of trading using opposite SFL and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL 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.The idea behind SFL Corporation and MicroSectorsTM Oil Gas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |