Correlation Between Carnegie Clean and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on Carnegie Clean and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and LIFENET INSURANCE.
Diversification Opportunities for Carnegie Clean and LIFENET INSURANCE
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carnegie and LIFENET is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Carnegie Clean and LIFENET INSURANCE
Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 1.14 times more return on investment than LIFENET INSURANCE. However, Carnegie Clean is 1.14 times more volatile than LIFENET INSURANCE CO. It trades about -0.03 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about -0.09 per unit of risk. If you would invest 2.22 in Carnegie Clean Energy on September 25, 2024 and sell it today you would lose (0.04) from holding Carnegie Clean Energy or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnegie Clean Energy vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| Carnegie Clean Energy |
| LIFENET INSURANCE |
Carnegie Clean and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnegie Clean and LIFENET INSURANCE
The main advantage of trading using opposite Carnegie Clean and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| Carnegie Clean vs. Orsted AS | Carnegie Clean vs. EDP Renovveis SA | Carnegie Clean vs. CGN Power Co | Carnegie Clean vs. Huaneng Power International |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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