Correlation Between Johcm Global and Energy Services

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

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

Diversification Opportunities for Johcm Global and Energy Services

0.83

Correlation Coefficient

Johcm Global  Energy Services

Very poor diversification

The 3 months correlation between Johcm and Energy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Johcm Global Equity and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Johcm Global 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 Johcm Global Equity are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Johcm Global i.e., Johcm Global and Energy Services go up and down completely randomly.

Pair Corralation between Johcm Global and Energy Services

Assuming the 90 days horizon Johcm Global Equity is expected to under-perform the Energy Services. In addition to that, Johcm Global is 1.02 times more volatile than Energy Services Fund. It trades about -0.08 of its total potential returns per unit of risk. Energy Services Fund is currently generating about -0.06 per unit of volatility. If you would invest  22,428  in Energy Services Fund on December 29, 2024 and sell it today you would lose (1,448) from holding Energy Services Fund or give up 6.46% of portfolio value over 90 days.

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

Johcm Global Equity  vs.  Energy Services Fund

Johcm Global Equity

Risk-Adjusted Performance

Very Weak

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

Energy Services

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Johcm Global and Energy Services

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

The idea behind Johcm Global Equity and Energy Services 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.