Correlation Between Guinness Atkinson and Energy Fund

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

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

Diversification Opportunities for Guinness Atkinson and Energy Fund

0.59

Correlation Coefficient

Guinness Atkinson  Energy Fund

Very weak diversification

The 3 months correlation between Guinness and Energy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Guinness Atkinson Alternative and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class and Guinness Atkinson 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 Guinness Atkinson Alternative are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Guinness Atkinson i.e., Guinness Atkinson and Energy Fund go up and down completely randomly.

Pair Corralation between Guinness Atkinson and Energy Fund

Assuming the 90 days horizon Guinness Atkinson Alternative is expected to under-perform the Energy Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guinness Atkinson Alternative is 1.36 times less risky than Energy Fund. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Energy Fund Class is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  21,068  in Energy Fund Class on October 7, 2024 and sell it today you would lose (1,928) from holding Energy Fund Class or give up 9.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guinness Atkinson Alternative  vs.  Energy Fund Class

Guinness Atkinson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guinness Atkinson Alternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Energy Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guinness Atkinson and Energy Fund

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

The idea behind Guinness Atkinson Alternative and Energy Fund Class 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.