Correlation Between World Energy and Target 2045

Can any of the company-specific risk be diversified away by investing in both World Energy and Target 2045 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 World Energy and Target 2045 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between World Energy Fund and Target 2045 Fund, you can compare the effects of market volatilities on World Energy and Target 2045 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 World Energy with a short position of Target 2045. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Target 2045.

Diversification Opportunities for World Energy and Target 2045

0.84

Correlation Coefficient

World Energy  Target 2045

Very poor diversification

The 3 months correlation between WORLD and Target is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Target 2045 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 2045 Fund and World Energy 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 World Energy Fund are associated (or correlated) with Target 2045. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target 2045 Fund has no effect on the direction of World Energy i.e., World Energy and Target 2045 go up and down completely randomly.

Pair Corralation between World Energy and Target 2045

Assuming the 90 days horizon World Energy is expected to generate 1.08 times less return on investment than Target 2045. In addition to that, World Energy is 1.94 times more volatile than Target 2045 Fund. It trades about 0.08 of its total potential returns per unit of risk. Target 2045 Fund is currently generating about 0.16 per unit of volatility. If you would invest  1,874  in Target 2045 Fund on July 29, 2025 and sell it today you would earn a total of  106.00  from holding Target 2045 Fund or generate 5.66% return on investment over 90 days.

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

World Energy Fund  vs.  Target 2045 Fund

World Energy

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in World Energy Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, World Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Target 2045 Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Target 2045 Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Target 2045 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with World Energy and Target 2045

The main advantage of trading using opposite World Energy and Target 2045 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Target 2045 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 Target 2045 will offset losses from the drop in Target 2045's long position.

The idea behind World Energy Fund and Target 2045 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.