Correlation Between World Energy and World Ex
Can any of the company-specific risk be diversified away by investing in both World Energy and World Ex 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 World Ex 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 World Ex Val, you can compare the effects of market volatilities on World Energy and World Ex 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 World Ex. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and World Ex.
Diversification Opportunities for World Energy and World Ex
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between World and World is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and World Ex Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Ex Val 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 World Ex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Ex Val has no effect on the direction of World Energy i.e., World Energy and World Ex go up and down completely randomly.
Pair Corralation between World Energy and World Ex
Assuming the 90 days horizon World Energy is expected to generate 1.44 times less return on investment than World Ex. In addition to that, World Energy is 1.57 times more volatile than World Ex Val. It trades about 0.11 of its total potential returns per unit of risk. World Ex Val is currently generating about 0.25 per unit of volatility. If you would invest 1,463 in World Ex Val on May 27, 2025 and sell it today you would earn a total of 159.00 from holding World Ex Val or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. World Ex Val
Performance |
| Timeline |
| World Energy |
| World Ex Val |
World Energy and World Ex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and World Ex
The main advantage of trading using opposite World Energy and World Ex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, World Ex 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 World Ex will offset losses from the drop in World Ex's long position.| World Energy vs. Baird Short Term Bond | World Energy vs. Franklin Federal Limited Term | World Energy vs. Barings Active Short | World Energy vs. Nuveen Short Term |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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