Correlation Between Eafe Pure and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both Eafe Pure 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 Eafe Pure and Firsthand Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Pure and Firsthand Alternative Energy, you can compare the effects of market volatilities on Eafe Pure 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 Eafe Pure with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Pure and Firsthand Alternative.
Diversification Opportunities for Eafe Pure and Firsthand Alternative
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eafe and Firsthand is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Pure and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and Eafe Pure 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 The Eafe Pure 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 Eafe Pure i.e., Eafe Pure and Firsthand Alternative go up and down completely randomly.
Pair Corralation between Eafe Pure and Firsthand Alternative
Assuming the 90 days horizon The Eafe Pure is expected to under-perform the Firsthand Alternative. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Eafe Pure is 1.27 times less risky than Firsthand Alternative. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Firsthand Alternative Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 999.00 in Firsthand Alternative Energy on September 4, 2024 and sell it today you would earn a total of 41.00 from holding Firsthand Alternative Energy or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Pure vs. Firsthand Alternative Energy
Performance |
| Timeline |
| Eafe Pure |
| Firsthand Alternative |
Eafe Pure and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Pure and Firsthand Alternative
The main advantage of trading using opposite Eafe Pure and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Pure 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.| Eafe Pure vs. Firsthand Alternative Energy | Eafe Pure vs. Gmo Resources | Eafe Pure vs. Franklin Natural Resources | Eafe Pure 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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