Correlation Between World Energy and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both World Energy and Firsthand Alternative 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 World Energy and Firsthand Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Firsthand Alternative Energy, you can compare the effects of market volatilities on World Energy and Firsthand Alternative 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 World Energy with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Firsthand Alternative.
Diversification Opportunities for World Energy and Firsthand Alternative
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Firsthand is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and World Energy 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 World Energy Fund are associated (or correlated) with Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of World Energy i.e., World Energy and Firsthand Alternative go up and down completely randomly.
Pair Corralation between World Energy and Firsthand Alternative
Assuming the 90 days horizon World Energy Fund is expected to generate 0.78 times more return on investment than Firsthand Alternative. However, World Energy Fund is 1.29 times less risky than Firsthand Alternative. It trades about 0.36 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.02 per unit of risk. If you would invest 1,418 in World Energy Fund on August 24, 2024 and sell it today you would earn a total of 138.00 from holding World Energy Fund or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Firsthand Alternative Energy
Performance |
| Timeline |
| World Energy |
| Firsthand Alternative |
World Energy and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Firsthand Alternative
The main advantage of trading using opposite World Energy and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's long position.| World Energy vs. Vanguard Energy Fund | World Energy vs. Vanguard Energy Index | World Energy vs. Fidelity Select Portfolios | World Energy vs. Fidelity Advisor Energy |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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