Correlation Between Motor Oil and World Fuel

Can any of the company-specific risk be diversified away by investing in both Motor Oil and World Fuel 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 Motor Oil and World Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Motor Oil Hellas and World Fuel Services, you can compare the effects of market volatilities on Motor Oil and World Fuel 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 Motor Oil with a short position of World Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motor Oil and World Fuel.

Diversification Opportunities for Motor Oil and World Fuel

-0.25

Correlation Coefficient

Motor Oil  World Fuel

Very good diversification

The 3 months correlation between Motor and World is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Hellas and World Fuel Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Fuel Services and Motor 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 Motor Oil Hellas are associated (or correlated) with World Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Fuel Services has no effect on the direction of Motor Oil i.e., Motor Oil and World Fuel go up and down completely randomly.

Pair Corralation between Motor Oil and World Fuel

If you would invest  2,195  in World Fuel Services on January 24, 2024 and sell it today you would earn a total of  0.00  from holding World Fuel Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Motor Oil Hellas  vs.  World Fuel Services

Motor Oil Hellas

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Hellas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Motor Oil may actually be approaching a critical reversion point that can send shares even higher in May 2024.

World Fuel Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Fuel Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, World Fuel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Motor Oil and World Fuel

The main advantage of trading using opposite Motor Oil and World Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motor Oil position performs unexpectedly, World Fuel 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 World Fuel will offset losses from the drop in World Fuel's long position.

The idea behind Motor Oil Hellas and World Fuel Services 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.