Correlation Between Firsthand Alternative and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Equity Growth 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 Equity Growth 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 Equity Growth Strategy, you can compare the effects of market volatilities on Firsthand Alternative and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Equity Growth.
Diversification Opportunities for Firsthand Alternative and Equity Growth
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Firsthand and Equity is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Equity Growth go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Equity Growth
Assuming the 90 days horizon Firsthand Alternative is expected to generate 2.5 times less return on investment than Equity Growth. In addition to that, Firsthand Alternative is 2.72 times more volatile than Equity Growth Strategy. It trades about 0.02 of its total potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.12 per unit of volatility. If you would invest 1,117 in Equity Growth Strategy on September 3, 2024 and sell it today you would earn a total of 241.00 from holding Equity Growth Strategy or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Equity Growth Strategy
Performance |
| Timeline |
| Firsthand Alternative |
| Equity Growth Strategy |
Firsthand Alternative and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Equity Growth
The main advantage of trading using opposite Firsthand Alternative and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth'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 |
| Equity Growth vs. World Energy Fund | Equity Growth vs. Firsthand Alternative Energy | Equity Growth vs. Goehring Rozencwajg Resources | Equity Growth vs. Energy Basic Materials |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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