Correlation Between Green Technology and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Green Technology and Dug Technology 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 Green Technology and Dug Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Technology Metals and Dug Technology, you can compare the effects of market volatilities on Green Technology and Dug Technology 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 Green Technology with a short position of Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Dug Technology.
Diversification Opportunities for Green Technology and Dug Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Green and Dug is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug Technology and Green Technology 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 Green Technology Metals are associated (or correlated) with Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Green Technology i.e., Green Technology and Dug Technology go up and down completely randomly.
Pair Corralation between Green Technology and Dug Technology
Assuming the 90 days trading horizon Green Technology Metals is expected to under-perform the Dug Technology. In addition to that, Green Technology is 1.21 times more volatile than Dug Technology. It trades about -0.32 of its total potential returns per unit of risk. Dug Technology is currently generating about -0.1 per unit of volatility. If you would invest 186.00 in Dug Technology on September 1, 2024 and sell it today you would lose (19.00) from holding Dug Technology or give up 10.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Technology Metals vs. Dug Technology
Performance |
| Timeline |
| Green Technology Metals |
| Dug Technology |
Green Technology and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Technology and Dug Technology
The main advantage of trading using opposite Green Technology and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Technology position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.| Green Technology vs. Northern Star Resources | Green Technology vs. Evolution Mining | Green Technology vs. Bluescope Steel | Green Technology vs. Sandfire Resources NL |
| Dug Technology vs. Garda Diversified Ppty | Dug Technology vs. Alternative Investment Trust | Dug Technology vs. Bluescope Steel | Dug Technology vs. Hudson Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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