Correlation Between Clime Investment and Xero
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Xero 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 Xero 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 Xero, you can compare the effects of market volatilities on Clime Investment and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Xero.
Diversification Opportunities for Clime Investment and Xero
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clime and Xero is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of Clime Investment i.e., Clime Investment and Xero go up and down completely randomly.
Pair Corralation between Clime Investment and Xero
Assuming the 90 days trading horizon Clime Investment Management is expected to generate 1.56 times more return on investment than Xero. However, Clime Investment is 1.56 times more volatile than Xero. It trades about 0.35 of its potential returns per unit of risk. Xero is currently generating about 0.1 per unit of risk. If you would invest 35.00 in Clime Investment Management on November 27, 2024 and sell it today you would earn a total of 5.00 from holding Clime Investment Management or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clime Investment Management vs. Xero
Performance |
| Timeline |
| Clime Investment Man |
| Xero |
Clime Investment and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Xero
The main advantage of trading using opposite Clime Investment and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Clime Investment vs. ABACUS STORAGE KING | Clime Investment vs. Data3 | Clime Investment vs. Chalice Mining Limited | Clime Investment vs. Gateway Mining |
| Xero vs. K2 Asset Management | Xero vs. Mirrabooka Investments | Xero vs. Sandon Capital Investments | Xero vs. Alternative Investment Trust |
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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