Correlation Between Ecofin Global and Gaztransport
Can any of the company-specific risk be diversified away by investing in both Ecofin Global and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on Ecofin Global and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Gaztransport.
Diversification Opportunities for Ecofin Global and Gaztransport
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ecofin and Gaztransport is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Ecofin Global i.e., Ecofin Global and Gaztransport go up and down completely randomly.
Pair Corralation between Ecofin Global and Gaztransport
Assuming the 90 days trading horizon Ecofin Global Utilities is expected to under-perform the Gaztransport. But the stock apears to be less risky and, when comparing its historical volatility, Ecofin Global Utilities is 1.38 times less risky than Gaztransport. The stock trades about -0.01 of its potential returns per unit of risk. The Gaztransport et Technigaz is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,491 in Gaztransport et Technigaz on August 31, 2024 and sell it today you would earn a total of 4,289 from holding Gaztransport et Technigaz or generate 45.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Gaztransport et Technigaz
Performance |
| Timeline |
| Ecofin Global Utilities |
| Gaztransport et Technigaz |
Ecofin Global and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Gaztransport
The main advantage of trading using opposite Ecofin Global and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| Ecofin Global vs. Samsung Electronics Co | Ecofin Global vs. Samsung Electronics Co | Ecofin Global vs. Hyundai Motor | Ecofin Global vs. Toyota Motor Corp |
| Gaztransport vs. Neometals | Gaztransport vs. Coor Service Management | Gaztransport vs. Aeorema Communications Plc | Gaztransport vs. JLEN Environmental Assets |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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