Correlation Between 29Metals and Green Technology
Can any of the company-specific risk be diversified away by investing in both 29Metals and Green Technology 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 29Metals and Green Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 29Metals and Green Technology Metals, you can compare the effects of market volatilities on 29Metals and Green Technology 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 29Metals with a short position of Green Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of 29Metals and Green Technology.
Diversification Opportunities for 29Metals and Green Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 29Metals and Green is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding 29Metals and Green Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Technology Metals and 29Metals 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 29Metals are associated (or correlated) with Green Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Technology Metals has no effect on the direction of 29Metals i.e., 29Metals and Green Technology go up and down completely randomly.
Pair Corralation between 29Metals and Green Technology
Assuming the 90 days trading horizon 29Metals is expected to generate 0.72 times more return on investment than Green Technology. However, 29Metals is 1.38 times less risky than Green Technology. It trades about -0.2 of its potential returns per unit of risk. Green Technology Metals is currently generating about -0.19 per unit of risk. If you would invest 40.00 in 29Metals on September 5, 2024 and sell it today you would lose (7.00) from holding 29Metals or give up 17.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
29Metals vs. Green Technology Metals
Performance |
Timeline |
29Metals |
Green Technology Metals |
29Metals and Green Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 29Metals and Green Technology
The main advantage of trading using opposite 29Metals and Green Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 29Metals position performs unexpectedly, Green Technology 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 Green Technology will offset losses from the drop in Green Technology's long position.29Metals vs. Northern Star Resources | 29Metals vs. Evolution Mining | 29Metals vs. Bluescope Steel | 29Metals vs. Sandfire Resources NL |
Green Technology vs. Northern Star Resources | Green Technology vs. Evolution Mining | Green Technology vs. Bluescope Steel | Green Technology vs. Sandfire Resources NL |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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