Correlation Between De Grey and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both De Grey and BROADWIND ENRGY 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 De Grey and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and BROADWIND ENRGY, you can compare the effects of market volatilities on De Grey and BROADWIND ENRGY 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 De Grey with a short position of BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and BROADWIND ENRGY.
Diversification Opportunities for De Grey and BROADWIND ENRGY
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DGD and BROADWIND is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and De Grey 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 De Grey Mining are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of De Grey i.e., De Grey and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between De Grey and BROADWIND ENRGY
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.71 times more return on investment than BROADWIND ENRGY. However, De Grey Mining is 1.41 times less risky than BROADWIND ENRGY. It trades about 0.03 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about 0.0 per unit of risk. If you would invest 94.00 in De Grey Mining on October 29, 2024 and sell it today you would earn a total of 25.00 from holding De Grey Mining or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. BROADWIND ENRGY
Performance |
| Timeline |
| De Grey Mining |
| BROADWIND ENRGY |
De Grey and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and BROADWIND ENRGY
The main advantage of trading using opposite De Grey and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.The idea behind De Grey Mining and BROADWIND ENRGY 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.| BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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