Correlation Between BetaPro Crude and First Asset

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

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

Diversification Opportunities for BetaPro Crude and First Asset

0.89

Correlation Coefficient

BetaPro Crude  First Asset

Very poor diversification

The 3 months correlation between BetaPro and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and BetaPro Crude 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 BetaPro Crude Oil are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of BetaPro Crude i.e., BetaPro Crude and First Asset go up and down completely randomly.

Pair Corralation between BetaPro Crude and First Asset

Assuming the 90 days trading horizon BetaPro Crude Oil is expected to generate 3.68 times more return on investment than First Asset. However, BetaPro Crude is 3.68 times more volatile than First Asset Energy. It trades about 0.07 of its potential returns per unit of risk. First Asset Energy is currently generating about 0.14 per unit of risk. If you would invest  972.00  in BetaPro Crude Oil on April 20, 2025 and sell it today you would earn a total of  146.00  from holding BetaPro Crude Oil or generate 15.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

BetaPro Crude Oil  vs.  First Asset Energy

BetaPro Crude Oil

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Crude Oil are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Crude displayed solid returns over the last few months and may actually be approaching a breakup point.

First Asset Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, First Asset may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BetaPro Crude and First Asset

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

The idea behind BetaPro Crude Oil and First Asset Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.