Correlation Between CleanTech Lithium and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Impax Environmental 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 Impax Environmental 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 Impax Environmental Markets, you can compare the effects of market volatilities on CleanTech Lithium and Impax Environmental 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Impax Environmental.
Diversification Opportunities for CleanTech Lithium and Impax Environmental
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CleanTech and Impax is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Impax Environmental go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Impax Environmental
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Impax Environmental. In addition to that, CleanTech Lithium is 5.06 times more volatile than Impax Environmental Markets. It trades about -0.05 of its total potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.01 per unit of volatility. If you would invest 41,867 in Impax Environmental Markets on October 14, 2024 and sell it today you would lose (3,617) from holding Impax Environmental Markets or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Impax Environmental Markets
Performance |
| Timeline |
| CleanTech Lithium plc |
| Impax Environmental |
CleanTech Lithium and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Impax Environmental
The main advantage of trading using opposite CleanTech Lithium and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Impax Environmental 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| CleanTech Lithium vs. LBG Media PLC | CleanTech Lithium vs. Universal Display Corp | CleanTech Lithium vs. Ubisoft Entertainment | CleanTech Lithium vs. Hollywood Bowl Group |
| Impax Environmental vs. Allianz Technology Trust | Impax Environmental vs. Sabien Technology Group | Impax Environmental vs. Xeros Technology Group | Impax Environmental vs. CleanTech Lithium 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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