Looking to invest in ENERGY THEME? Avoid at the moment as it was among the worst performers

Energy was among the worst performers on Tuesday. It fell by -1.83% to close at 1108.66. On a day when the overall market breadth was 34%, it closed higher than 69% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Theme constituents]

~ENERGY showed a strong bearish trend over the last 3 months. During this period ~ENERGY fell by -20.92% and saw a maximum drawdown of -23.06%. There was a short signal during this period which returned +20.92%.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

~ENERGY has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Jan, 2017 to 30 Nov, 2018. Over the last 2 years 11 months and 14 days, ~ENERGY underperformed the SP500 index on 48% days. Which indicates that on days ~ENERGY underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months ~ENERGY was mostly loss making and delivered on average -0.36% per day. It's best return during this period (of +2.16%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -3.72%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -10.18% of investor capital.

During the last year ~ENERGY had 7 profitable months and 5 loss making months. ~ENERGY returned profits in fewer months than SP500 index. ~ENERGY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -12.63% compared to -7.75% returned by SP500 index in Dec 2018. ~ENERGY had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both ~ENERGY and SP500 index significantly outperform during months when quarterly/annual results are announced.

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
-- Charles Dickens

~ENERGY is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ~ENERGY's volatility from 20 Sep, 2018 to 26 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~ENERGY has significant positive skewness in it's return distribution. This indicates that investors can expect ~ENERGY to recover from drawdowns quickly. Which makes ~ENERGY a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

~ENERGY has more chance of extreme outcomes than the SP500 index. Therefore, ~ENERGY must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than ~ENERGY.

Based on your interest in ~ENERGY you may find it interesting to know that DFBG, NFEC and TNDM have all shown remarkable performance this year and deserve to be on every investor's watchlist.