Correlation Between Firsthand Alternative and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Ab Sustainable 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 Firsthand Alternative and Ab Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Alternative Energy and Ab Sustainable Global, you can compare the effects of market volatilities on Firsthand Alternative and Ab Sustainable 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 Firsthand Alternative with a short position of Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Ab Sustainable.
Diversification Opportunities for Firsthand Alternative and Ab Sustainable
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Firsthand and ATEYX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Ab Sustainable Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Global and Firsthand Alternative 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 Firsthand Alternative Energy are associated (or correlated) with Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Global has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Ab Sustainable go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Ab Sustainable
Assuming the 90 days horizon Firsthand Alternative is expected to generate 1.99 times less return on investment than Ab Sustainable. In addition to that, Firsthand Alternative is 2.17 times more volatile than Ab Sustainable Global. It trades about 0.02 of its total potential returns per unit of risk. Ab Sustainable Global is currently generating about 0.08 per unit of volatility. If you would invest 15,037 in Ab Sustainable Global on September 2, 2024 and sell it today you would earn a total of 2,631 from holding Ab Sustainable Global or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Ab Sustainable Global
Performance |
| Timeline |
| Firsthand Alternative |
| Ab Sustainable Global |
Firsthand Alternative and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Ab Sustainable
The main advantage of trading using opposite Firsthand Alternative and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Ab Sustainable 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 Ab Sustainable will offset losses from the drop in Ab Sustainable's long position.The idea behind Firsthand Alternative Energy and Ab Sustainable Global 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.
| Ab Sustainable vs. Fidelity Advisor Energy | Ab Sustainable vs. Firsthand Alternative Energy | Ab Sustainable vs. Calvert Global Energy | Ab Sustainable vs. Energy Services Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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