Correlation Between 2G ENERGY and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both 2G ENERGY and SWISS WATER 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 2G ENERGY and SWISS WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2G ENERGY and SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on 2G ENERGY and SWISS WATER 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 2G ENERGY with a short position of SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2G ENERGY and SWISS WATER.
Diversification Opportunities for 2G ENERGY and SWISS WATER
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2GB and SWISS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding 2G ENERGY and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE and 2G 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 2G ENERGY are associated (or correlated) with SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of 2G ENERGY i.e., 2G ENERGY and SWISS WATER go up and down completely randomly.
Pair Corralation between 2G ENERGY and SWISS WATER
Assuming the 90 days trading horizon 2G ENERGY is expected to generate 8.46 times less return on investment than SWISS WATER. In addition to that, 2G ENERGY is 1.12 times more volatile than SWISS WATER DECAFFCOFFEE. It trades about 0.01 of its total potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.13 per unit of volatility. If you would invest 252.00 in SWISS WATER DECAFFCOFFEE on September 1, 2024 and sell it today you would earn a total of 16.00 from holding SWISS WATER DECAFFCOFFEE or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
2G ENERGY vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| 2G ENERGY |
| SWISS WATER DECAFFCOFFEE |
2G ENERGY and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2G ENERGY and SWISS WATER
The main advantage of trading using opposite 2G ENERGY and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2G ENERGY position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| 2G ENERGY vs. Australian Agricultural | 2G ENERGY vs. Ultra Clean Holdings | 2G ENERGY vs. Charter Communications | 2G ENERGY vs. Consolidated Communications Holdings |
| SWISS WATER vs. RCM TECHNOLOGIES | SWISS WATER vs. Reinsurance Group of | SWISS WATER vs. REVO INSURANCE SPA | SWISS WATER vs. Insurance Australia Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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