Correlation Between Archer Stock and World Energy

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

By analyzing existing cross correlation between Archer Stock Fund and World Energy Fund, you can compare the effects of market volatilities on Archer Stock and World Energy 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 Archer Stock with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Stock and World Energy.

Diversification Opportunities for Archer Stock and World Energy

0.07

Correlation Coefficient

Archer Stock  World Energy

Significant diversification

The 3 months correlation between Archer and World is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Archer Stock Fund and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Archer Stock 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 Archer Stock Fund are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Archer Stock i.e., Archer Stock and World Energy go up and down completely randomly.

Pair Corralation between Archer Stock and World Energy

Assuming the 90 days horizon Archer Stock Fund is expected to under-perform the World Energy. In addition to that, Archer Stock is 1.05 times more volatile than World Energy Fund. It trades about -0.13 of its total potential returns per unit of risk. World Energy Fund is currently generating about 0.1 per unit of volatility. If you would invest  1,415  in World Energy Fund on October 9, 2024 and sell it today you would earn a total of  101.00  from holding World Energy Fund or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Archer Stock Fund  vs.  World Energy Fund

Archer Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

World Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in World Energy Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, World Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Archer Stock and World Energy

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

The idea behind Archer Stock Fund and World Energy Fund 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.