Correlation Between Ecofibre and Credit Clear
Can any of the company-specific risk be diversified away by investing in both Ecofibre and Credit Clear 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 Ecofibre and Credit Clear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Credit Clear, you can compare the effects of market volatilities on Ecofibre and Credit Clear 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 Ecofibre with a short position of Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Credit Clear.
Diversification Opportunities for Ecofibre and Credit Clear
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecofibre and Credit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear and Ecofibre 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 Ecofibre are associated (or correlated) with Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of Ecofibre i.e., Ecofibre and Credit Clear go up and down completely randomly.
Pair Corralation between Ecofibre and Credit Clear
Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Credit Clear. In addition to that, Ecofibre is 1.07 times more volatile than Credit Clear. It trades about -0.22 of its total potential returns per unit of risk. Credit Clear is currently generating about 0.27 per unit of volatility. If you would invest 31.00 in Credit Clear on August 26, 2024 and sell it today you would earn a total of 6.00 from holding Credit Clear or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Credit Clear
Performance |
| Timeline |
| Ecofibre |
| Credit Clear |
Ecofibre and Credit Clear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Credit Clear
The main advantage of trading using opposite Ecofibre and Credit Clear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre position performs unexpectedly, Credit Clear 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 Credit Clear will offset losses from the drop in Credit Clear's long position.| Ecofibre vs. Energy Resources | Ecofibre vs. 88 Energy | Ecofibre vs. Amani Gold | Ecofibre vs. A1 Investments Resources |
| Credit Clear vs. Westpac Banking | Credit Clear vs. Ecofibre | Credit Clear vs. iShares Global Healthcare | Credit Clear vs. Adriatic Metals Plc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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