Correlation Between Clime Investment and Australia
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Australia 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 Clime Investment and Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clime Investment Management and Australia and New, you can compare the effects of market volatilities on Clime Investment and Australia 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 Clime Investment with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Australia.
Diversification Opportunities for Clime Investment and Australia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clime and Australia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Clime Investment 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 Clime Investment Management are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Clime Investment i.e., Clime Investment and Australia go up and down completely randomly.
Pair Corralation between Clime Investment and Australia
Assuming the 90 days trading horizon Clime Investment is expected to generate 8.7 times less return on investment than Australia. In addition to that, Clime Investment is 2.33 times more volatile than Australia and New. It trades about 0.01 of its total potential returns per unit of risk. Australia and New is currently generating about 0.11 per unit of volatility. If you would invest 2,099 in Australia and New on August 29, 2024 and sell it today you would earn a total of 1,031 from holding Australia and New or generate 49.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clime Investment Management vs. Australia and New
Performance |
| Timeline |
| Clime Investment Man |
| Australia and New |
Clime Investment and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Australia
The main advantage of trading using opposite Clime Investment and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| Clime Investment vs. National Australia Bank | Clime Investment vs. National Australia Bank | Clime Investment vs. Westpac Banking | Clime Investment vs. National Australia Bank |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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