Correlation Between Clean Air and ManhattanLimited
Can any of the company-specific risk be diversified away by investing in both Clean Air and ManhattanLimited 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 Clean Air and ManhattanLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Air Metals and Manhattan Limited, you can compare the effects of market volatilities on Clean Air and ManhattanLimited 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 Clean Air with a short position of ManhattanLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and ManhattanLimited.
Diversification Opportunities for Clean Air and ManhattanLimited
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clean and ManhattanLimited is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Manhattan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Limited and Clean Air 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 Clean Air Metals are associated (or correlated) with ManhattanLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Limited has no effect on the direction of Clean Air i.e., Clean Air and ManhattanLimited go up and down completely randomly.
Pair Corralation between Clean Air and ManhattanLimited
Assuming the 90 days horizon Clean Air Metals is expected to under-perform the ManhattanLimited. In addition to that, Clean Air is 1.28 times more volatile than Manhattan Limited. It trades about -0.29 of its total potential returns per unit of risk. Manhattan Limited is currently generating about -0.3 per unit of volatility. If you would invest 0.45 in Manhattan Limited on August 29, 2024 and sell it today you would lose (0.15) from holding Manhattan Limited or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Air Metals vs. Manhattan Limited
Performance |
| Timeline |
| Clean Air Metals |
| Manhattan Limited |
Clean Air and ManhattanLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Air and ManhattanLimited
The main advantage of trading using opposite Clean Air and ManhattanLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Air position performs unexpectedly, ManhattanLimited 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 ManhattanLimited will offset losses from the drop in ManhattanLimited's long position.| Clean Air vs. Morningstar Unconstrained Allocation | Clean Air vs. High Yield Municipal Fund | Clean Air vs. Knife River | Clean Air vs. Klckner Co SE |
| ManhattanLimited vs. Morningstar Unconstrained Allocation | ManhattanLimited vs. High Yield Municipal Fund | ManhattanLimited vs. Knife River | ManhattanLimited vs. Klckner Co SE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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