Correlation Between Carnegie Clean and LGI
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and LGI 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 Carnegie Clean and LGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnegie Clean Energy and LGI, you can compare the effects of market volatilities on Carnegie Clean and LGI 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 Carnegie Clean with a short position of LGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and LGI.
Diversification Opportunities for Carnegie Clean and LGI
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carnegie and LGI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and LGI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with LGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and LGI go up and down completely randomly.
Pair Corralation between Carnegie Clean and LGI
Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 1.8 times more return on investment than LGI. However, Carnegie Clean is 1.8 times more volatile than LGI. It trades about 0.08 of its potential returns per unit of risk. LGI is currently generating about 0.0 per unit of risk. If you would invest 3.60 in Carnegie Clean Energy on November 1, 2024 and sell it today you would earn a total of 0.20 from holding Carnegie Clean Energy or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Carnegie Clean Energy vs. LGI
Performance |
| Timeline |
| Carnegie Clean Energy |
| LGI |
Carnegie Clean and LGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnegie Clean and LGI
The main advantage of trading using opposite Carnegie Clean and LGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean position performs unexpectedly, LGI 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 LGI will offset losses from the drop in LGI's long position.| Carnegie Clean vs. Oneview Healthcare PLC | Carnegie Clean vs. Health and Plant | Carnegie Clean vs. Fisher Paykel Healthcare | Carnegie Clean vs. Regal Funds Management |
| LGI vs. Carnegie Clean Energy | LGI vs. Kkr Credit Income | LGI vs. Wt Financial Group | LGI vs. Charter Hall Education |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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