Correlation Between Energy Technologies and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both Energy Technologies and Flagship Investments 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 Energy Technologies and Flagship Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Flagship Investments, you can compare the effects of market volatilities on Energy Technologies and Flagship Investments 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 Energy Technologies with a short position of Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Flagship Investments.
Diversification Opportunities for Energy Technologies and Flagship Investments
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Flagship is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments and Energy Technologies 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 Energy Technologies Limited are associated (or correlated) with Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Energy Technologies i.e., Energy Technologies and Flagship Investments go up and down completely randomly.
Pair Corralation between Energy Technologies and Flagship Investments
Assuming the 90 days trading horizon Energy Technologies Limited is expected to under-perform the Flagship Investments. In addition to that, Energy Technologies is 1.71 times more volatile than Flagship Investments. It trades about -0.07 of its total potential returns per unit of risk. Flagship Investments is currently generating about 0.04 per unit of volatility. If you would invest 185.00 in Flagship Investments on August 25, 2024 and sell it today you would earn a total of 20.00 from holding Flagship Investments or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Flagship Investments
Performance |
| Timeline |
| Energy Technologies |
| Flagship Investments |
Energy Technologies and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Flagship Investments
The main advantage of trading using opposite Energy Technologies and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies position performs unexpectedly, Flagship Investments 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| Energy Technologies vs. Alto Metals | Energy Technologies vs. Aurelia Metals | Energy Technologies vs. Bluescope Steel | Energy Technologies vs. Hotel Property Investments |
| Flagship Investments vs. Advanced Braking Technology | Flagship Investments vs. Neurotech International | Flagship Investments vs. Lendlease Group | Flagship Investments vs. Energy Technologies Limited |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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