Correlation Between Oil Gas and Maine Municipal

Can any of the company-specific risk be diversified away by investing in both Oil Gas and Maine Municipal 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 Maine Municipal 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 Maine Municipal Fund, you can compare the effects of market volatilities on Oil Gas and Maine Municipal 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 Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Maine Municipal.

Diversification Opportunities for Oil Gas and Maine Municipal

0.02

Correlation Coefficient

Oil Gas  Maine Municipal

Significant diversification

The 3 months correlation between Oil and Maine is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal 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 Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Oil Gas i.e., Oil Gas and Maine Municipal go up and down completely randomly.

Pair Corralation between Oil Gas and Maine Municipal

If you would invest  3,742  in Oil Gas Ultrasector on September 16, 2024 and sell it today you would lose (128.00) from holding Oil Gas Ultrasector or give up 3.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Oil Gas Ultrasector  vs.  Maine Municipal Fund

Oil Gas Ultrasector

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Gas Ultrasector are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oil Gas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maine Municipal

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Maine Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Maine Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oil Gas and Maine Municipal

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

The idea behind Oil Gas Ultrasector and Maine Municipal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.