Correlation Between Clime Investment and Prime Financial
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Prime Financial 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 Prime Financial 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 Prime Financial Group, you can compare the effects of market volatilities on Clime Investment and Prime Financial 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 Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Prime Financial.
Diversification Opportunities for Clime Investment and Prime Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clime and Prime is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of Clime Investment i.e., Clime Investment and Prime Financial go up and down completely randomly.
Pair Corralation between Clime Investment and Prime Financial
Assuming the 90 days trading horizon Clime Investment Management is expected to under-perform the Prime Financial. But the stock apears to be less risky and, when comparing its historical volatility, Clime Investment Management is 1.35 times less risky than Prime Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Prime Financial Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Prime Financial Group on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Prime Financial Group or generate 21.05% 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. Prime Financial Group
Performance |
| Timeline |
| Clime Investment Man |
| Prime Financial Group |
Clime Investment and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Prime Financial
The main advantage of trading using opposite Clime Investment and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Prime Financial 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 Prime Financial will offset losses from the drop in Prime Financial's long position.| Clime Investment vs. Champion Iron | Clime Investment vs. Ridley | Clime Investment vs. Peel Mining | Clime Investment vs. Australian Dairy Farms |
| Prime Financial vs. Champion Iron | Prime Financial vs. Ridley | Prime Financial vs. Peel Mining | Prime Financial vs. Australian Dairy Farms |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |