Correlation Between Energy Resources and Retail Food
Can any of the company-specific risk be diversified away by investing in both Energy Resources and Retail Food 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 Energy Resources and Retail Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Resources and Retail Food Group, you can compare the effects of market volatilities on Energy Resources and Retail Food 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 Energy Resources with a short position of Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and Retail Food.
Diversification Opportunities for Energy Resources and Retail Food
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Retail is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Energy Resources 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 Energy Resources are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Energy Resources i.e., Energy Resources and Retail Food go up and down completely randomly.
Pair Corralation between Energy Resources and Retail Food
Assuming the 90 days trading horizon Energy Resources is expected to under-perform the Retail Food. In addition to that, Energy Resources is 2.55 times more volatile than Retail Food Group. It trades about -0.13 of its total potential returns per unit of risk. Retail Food Group is currently generating about -0.04 per unit of volatility. If you would invest 216.00 in Retail Food Group on December 2, 2024 and sell it today you would lose (10.00) from holding Retail Food Group or give up 4.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Energy Resources vs. Retail Food Group
Performance |
Timeline |
Energy Resources |
Retail Food Group |
Energy Resources and Retail Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energy Resources and Retail Food
The main advantage of trading using opposite Energy Resources and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Resources position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.Energy Resources vs. Australian Strategic Materials | Energy Resources vs. Queste Communications | Energy Resources vs. Carlton Investments | Energy Resources vs. Auctus Alternative Investments |
Retail Food vs. Sequoia Financial Group | Retail Food vs. Bell Financial Group | Retail Food vs. MA Financial Group | Retail Food vs. Technology One |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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