Correlation Between Firsthand Alternative and Small Midcap
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Small Midcap 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 Small Midcap 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 Small Midcap Dividend Income, you can compare the effects of market volatilities on Firsthand Alternative and Small Midcap 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 Small Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Small Midcap.
Diversification Opportunities for Firsthand Alternative and Small Midcap
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Firsthand and Small is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend 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 Small Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Small Midcap go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Small Midcap
Assuming the 90 days horizon Firsthand Alternative Energy is expected to under-perform the Small Midcap. In addition to that, Firsthand Alternative is 1.79 times more volatile than Small Midcap Dividend Income. It trades about -0.02 of its total potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.06 per unit of volatility. If you would invest 1,642 in Small Midcap Dividend Income on September 12, 2024 and sell it today you would earn a total of 367.00 from holding Small Midcap Dividend Income or generate 22.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Small Midcap Dividend Income
Performance |
| Timeline |
| Firsthand Alternative |
| Small Midcap Dividend |
Firsthand Alternative and Small Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Small Midcap
The main advantage of trading using opposite Firsthand Alternative and Small Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Small Midcap 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 Small Midcap will offset losses from the drop in Small Midcap's long position.| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
| Small Midcap vs. Fidelity Advisor Energy | Small Midcap vs. Energy Basic Materials | Small Midcap vs. Thrivent Natural Resources | Small Midcap vs. Firsthand Alternative Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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