Correlation Between Firsthand Alternative and International Developed
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and International Developed 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 International Developed 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 International Developed Markets, you can compare the effects of market volatilities on Firsthand Alternative and International Developed 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 International Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and International Developed.
Diversification Opportunities for Firsthand Alternative and International Developed
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Firsthand and International is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and International Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Developed 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 International Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Developed has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and International Developed go up and down completely randomly.
Pair Corralation between Firsthand Alternative and International Developed
Assuming the 90 days horizon Firsthand Alternative Energy is expected to generate 2.29 times more return on investment than International Developed. However, Firsthand Alternative is 2.29 times more volatile than International Developed Markets. It trades about 0.02 of its potential returns per unit of risk. International Developed Markets is currently generating about 0.03 per unit of risk. If you would invest 999.00 in Firsthand Alternative Energy on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Firsthand Alternative Energy or generate 2.2% 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. International Developed Market
Performance |
| Timeline |
| Firsthand Alternative |
| International Developed |
Firsthand Alternative and International Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and International Developed
The main advantage of trading using opposite Firsthand Alternative and International Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, International Developed 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 International Developed will offset losses from the drop in International Developed'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 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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