Correlation Between Environmental and COG Financial
Can any of the company-specific risk be diversified away by investing in both Environmental and COG Financial 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 Environmental and COG Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Environmental Group and COG Financial Services, you can compare the effects of market volatilities on Environmental and COG Financial 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 Environmental with a short position of COG Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental and COG Financial.
Diversification Opportunities for Environmental and COG Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Environmental and COG is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services and Environmental 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 The Environmental Group are associated (or correlated) with COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Environmental i.e., Environmental and COG Financial go up and down completely randomly.
Pair Corralation between Environmental and COG Financial
Assuming the 90 days trading horizon Environmental is expected to generate 1.74 times less return on investment than COG Financial. In addition to that, Environmental is 1.43 times more volatile than COG Financial Services. It trades about 0.05 of its total potential returns per unit of risk. COG Financial Services is currently generating about 0.11 per unit of volatility. If you would invest 90.00 in COG Financial Services on October 30, 2024 and sell it today you would earn a total of 8.00 from holding COG Financial Services or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Environmental Group vs. COG Financial Services
Performance |
| Timeline |
| The Environmental |
| COG Financial Services |
Environmental and COG Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental and COG Financial
The main advantage of trading using opposite Environmental and COG Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental position performs unexpectedly, COG Financial 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 COG Financial will offset losses from the drop in COG Financial's long position.| Environmental vs. Sky Metals | Environmental vs. Aurelia Metals | Environmental vs. Stelar Metals | Environmental vs. Dalaroo Metals |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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