Correlation Between Ecofin Global and Global Net
Can any of the company-specific risk be diversified away by investing in both Ecofin Global and Global Net 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 Ecofin Global and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and Global Net Lease, you can compare the effects of market volatilities on Ecofin Global and Global Net 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 Ecofin Global with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Global Net.
Diversification Opportunities for Ecofin Global and Global Net
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecofin and Global is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Ecofin Global 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 Ecofin Global Utilities are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Ecofin Global i.e., Ecofin Global and Global Net go up and down completely randomly.
Pair Corralation between Ecofin Global and Global Net
Assuming the 90 days trading horizon Ecofin Global Utilities is expected to generate 0.7 times more return on investment than Global Net. However, Ecofin Global Utilities is 1.44 times less risky than Global Net. It trades about 0.2 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.1 per unit of risk. If you would invest 18,000 in Ecofin Global Utilities on October 25, 2024 and sell it today you would earn a total of 1,100 from holding Ecofin Global Utilities or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Global Net Lease
Performance |
| Timeline |
| Ecofin Global Utilities |
| Global Net Lease |
Ecofin Global and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Global Net
The main advantage of trading using opposite Ecofin Global and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Ecofin Global vs. BW Offshore | Ecofin Global vs. Gear4music Plc | Ecofin Global vs. Capital Metals PLC | Ecofin Global vs. Infrastrutture Wireless Italiane |
| Global Net vs. Medical Properties Trust | Global Net vs. Catena Media PLC | Global Net vs. XLMedia PLC | Global Net vs. Hollywood Bowl Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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