Correlation Between Energy Fund and Guinness Atkinson

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

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

Diversification Opportunities for Energy Fund and Guinness Atkinson

0.59

Correlation Coefficient

Energy Fund  Guinness Atkinson

Very weak diversification

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

Pair Corralation between Energy Fund and Guinness Atkinson

Assuming the 90 days horizon Energy Fund Investor is expected to under-perform the Guinness Atkinson. In addition to that, Energy Fund is 1.66 times more volatile than Guinness Atkinson Global. It trades about -0.24 of its total potential returns per unit of risk. Guinness Atkinson Global is currently generating about -0.23 per unit of volatility. If you would invest  2,454  in Guinness Atkinson Global on September 15, 2024 and sell it today you would lose (99.00) from holding Guinness Atkinson Global or give up 4.03% of portfolio value over 90 days.

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

Energy Fund Investor  vs.  Guinness Atkinson Global

Energy Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guinness Atkinson Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Energy Fund and Guinness Atkinson

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

The idea behind Energy Fund Investor and Guinness Atkinson Global 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.