Correlation Between Broadwind and ITM Power
Can any of the company-specific risk be diversified away by investing in both Broadwind and ITM Power 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 Broadwind and ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and ITM Power Plc, you can compare the effects of market volatilities on Broadwind and ITM Power 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 Broadwind with a short position of ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and ITM Power.
Diversification Opportunities for Broadwind and ITM Power
Very poor diversification
The 3 months correlation between Broadwind and ITM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc and Broadwind 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 Broadwind are associated (or correlated) with ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Broadwind i.e., Broadwind and ITM Power go up and down completely randomly.
Pair Corralation between Broadwind and ITM Power
Assuming the 90 days trading horizon Broadwind is expected to generate 0.96 times more return on investment than ITM Power. However, Broadwind is 1.04 times less risky than ITM Power. It trades about 0.01 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.02 per unit of risk. If you would invest 198.00 in Broadwind on September 4, 2024 and sell it today you would lose (25.00) from holding Broadwind or give up 12.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Broadwind vs. ITM Power Plc
Performance |
| Timeline |
| Broadwind |
| ITM Power Plc |
Broadwind and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and ITM Power
The main advantage of trading using opposite Broadwind and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Broadwind vs. MINCO SILVER | Broadwind vs. Ming Le Sports | Broadwind vs. GRIFFIN MINING LTD | Broadwind vs. CI GAMES SA |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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