Correlation Between United States and United States

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

By analyzing existing cross correlation between United States Oil and United States Brent, you can compare the effects of market volatilities on United States and United States 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 United States with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and United States.

Diversification Opportunities for United States and United States

0.87

Correlation Coefficient

United States  United States

Very poor diversification

The 3 months correlation between United and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding United States Oil and United States Brent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Brent and United States 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 United States Oil are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Brent has no effect on the direction of United States i.e., United States and United States go up and down completely randomly.

Pair Corralation between United States and United States

Considering the 90-day investment horizon United States Oil is expected to under-perform the United States. In addition to that, United States is 1.04 times more volatile than United States Brent. It trades about 0.0 of its total potential returns per unit of risk. United States Brent is currently generating about 0.04 per unit of volatility. If you would invest  3,219  in United States Brent on January 31, 2024 and sell it today you would earn a total of  24.00  from holding United States Brent or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

United States Oil  vs.  United States Brent

United States Oil

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Oil are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in May 2024.

United States Brent

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Brent are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with United States and United States

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

The idea behind United States Oil and United States Brent 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.