Correlation Between Firsthand Alternative and Mid Capitalization
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Mid Capitalization 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 Mid Capitalization 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 Mid Capitalization Portfolio, you can compare the effects of market volatilities on Firsthand Alternative and Mid Capitalization 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 Mid Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Mid Capitalization.
Diversification Opportunities for Firsthand Alternative and Mid Capitalization
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Firsthand and Mid is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Mid Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Capitalization 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 Mid Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Capitalization has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Mid Capitalization go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Mid Capitalization
Assuming the 90 days horizon Firsthand Alternative is expected to generate 2.65 times less return on investment than Mid Capitalization. In addition to that, Firsthand Alternative is 1.11 times more volatile than Mid Capitalization Portfolio. It trades about 0.12 of its total potential returns per unit of risk. Mid Capitalization Portfolio is currently generating about 0.34 per unit of volatility. If you would invest 1,537 in Mid Capitalization Portfolio on September 1, 2024 and sell it today you would earn a total of 153.00 from holding Mid Capitalization Portfolio or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Mid Capitalization Portfolio
Performance |
| Timeline |
| Firsthand Alternative |
| Mid Capitalization |
Firsthand Alternative and Mid Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Mid Capitalization
The main advantage of trading using opposite Firsthand Alternative and Mid Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Mid Capitalization 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 Mid Capitalization will offset losses from the drop in Mid Capitalization'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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