Correlation Between Energy Basic and Hussman Strategic

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

By analyzing existing cross correlation between Energy Basic Materials and Hussman Strategic Allocation, you can compare the effects of market volatilities on Energy Basic and Hussman Strategic 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 Basic with a short position of Hussman Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Hussman Strategic.

Diversification Opportunities for Energy Basic and Hussman Strategic

-0.17

Correlation Coefficient

Energy Basic  Hussman Strategic

Good diversification

The 3 months correlation between Energy and Hussman is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Hussman Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hussman Strategic and Energy Basic 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 Basic Materials are associated (or correlated) with Hussman Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hussman Strategic has no effect on the direction of Energy Basic i.e., Energy Basic and Hussman Strategic go up and down completely randomly.

Pair Corralation between Energy Basic and Hussman Strategic

Assuming the 90 days horizon Energy Basic Materials is expected to under-perform the Hussman Strategic. In addition to that, Energy Basic is 2.69 times more volatile than Hussman Strategic Allocation. It trades about -0.06 of its total potential returns per unit of risk. Hussman Strategic Allocation is currently generating about 0.05 per unit of volatility. If you would invest  935.00  in Hussman Strategic Allocation on September 17, 2024 and sell it today you would earn a total of  9.00  from holding Hussman Strategic Allocation or generate 0.96% return on investment over 90 days.

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

Energy Basic Materials  vs.  Hussman Strategic Allocation

Energy Basic Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hussman Strategic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hussman Strategic Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hussman Strategic 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 Basic and Hussman Strategic

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

The idea behind Energy Basic Materials and Hussman Strategic Allocation 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .