Correlation Between Oil Gas and Kinetics Market

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

By analyzing existing cross correlation between Oil Gas Ultrasector and Kinetics Market Opportunities, you can compare the effects of market volatilities on Oil Gas and Kinetics Market 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 Oil Gas with a short position of Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Kinetics Market.

Diversification Opportunities for Oil Gas and Kinetics Market

0.73

Correlation Coefficient

Oil Gas  Kinetics Market

Poor diversification

The 3 months correlation between Oil and Kinetics is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo and Oil Gas 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 Oil Gas Ultrasector are associated (or correlated) with Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Oil Gas i.e., Oil Gas and Kinetics Market go up and down completely randomly.

Pair Corralation between Oil Gas and Kinetics Market

Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 0.98 times more return on investment than Kinetics Market. However, Oil Gas Ultrasector is 1.02 times less risky than Kinetics Market. It trades about 0.12 of its potential returns per unit of risk. Kinetics Market Opportunities is currently generating about 0.08 per unit of risk. If you would invest  3,279  in Oil Gas Ultrasector on December 29, 2024 and sell it today you would earn a total of  450.00  from holding Oil Gas Ultrasector or generate 13.72% return on investment over 90 days.

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

Oil Gas Ultrasector  vs.  Kinetics Market Opportunities

Oil Gas Ultrasector

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Gas Ultrasector are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oil Gas showed solid returns over the last few months and may actually be approaching a breakup point.

Kinetics Market Oppo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Market may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oil Gas and Kinetics Market

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

The idea behind Oil Gas Ultrasector and Kinetics Market Opportunities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.