Correlation Between Oil Equipment and Ultrashort Japan

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

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

Diversification Opportunities for Oil Equipment and Ultrashort Japan

0.0

Correlation Coefficient

Oil Equipment  Ultrashort Japan

Pay attention - limited upside

The 3 months correlation between Oil and Ultrashort is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oil Equipment Services and Ultrashort Japan Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Japan Profund and Oil Equipment 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 Oil Equipment Services are associated (or correlated) with Ultrashort Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Japan Profund has no effect on the direction of Oil Equipment i.e., Oil Equipment and Ultrashort Japan go up and down completely randomly.

Pair Corralation between Oil Equipment and Ultrashort Japan

If you would invest  3,989  in Ultrashort Japan Profund on February 3, 2025 and sell it today you would earn a total of  264.00  from holding Ultrashort Japan Profund or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Oil Equipment Services  vs.  Ultrashort Japan Profund

Oil Equipment Services

Risk-Adjusted Performance

Very Weak

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

Ultrashort Japan Profund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrashort Japan Profund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrashort Japan may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Oil Equipment and Ultrashort Japan

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

The idea behind Oil Equipment Services and Ultrashort Japan Profund 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.