Correlation Between CleanTech Lithium and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Guaranty Trust 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 CleanTech Lithium and Guaranty Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Guaranty Trust Holding, you can compare the effects of market volatilities on CleanTech Lithium and Guaranty Trust 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 CleanTech Lithium with a short position of Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Guaranty Trust.
Diversification Opportunities for CleanTech Lithium and Guaranty Trust
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CleanTech and Guaranty is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding and CleanTech Lithium 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 CleanTech Lithium plc are associated (or correlated) with Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Guaranty Trust go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Guaranty Trust
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Guaranty Trust. In addition to that, CleanTech Lithium is 1.15 times more volatile than Guaranty Trust Holding. It trades about -0.03 of its total potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.02 per unit of volatility. If you would invest 217.00 in Guaranty Trust Holding on August 30, 2024 and sell it today you would lose (32.00) from holding Guaranty Trust Holding or give up 14.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Guaranty Trust Holding
Performance |
| Timeline |
| CleanTech Lithium plc |
| Guaranty Trust Holding |
CleanTech Lithium and Guaranty Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Guaranty Trust
The main advantage of trading using opposite CleanTech Lithium and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.The idea behind CleanTech Lithium plc and Guaranty Trust Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Guaranty Trust vs. CleanTech Lithium plc | Guaranty Trust vs. Lindsell Train Investment | Guaranty Trust vs. X FAB Silicon Foundries | Guaranty Trust vs. Concurrent Technologies Plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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