Correlation Between Power Global and Power Momentum
Can any of the company-specific risk be diversified away by investing in both Power Global and Power Momentum 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 Power Global and Power Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Global Tactical and Power Momentum Index, you can compare the effects of market volatilities on Power Global and Power Momentum 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 Power Global with a short position of Power Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Global and Power Momentum.
Diversification Opportunities for Power Global and Power Momentum
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Power is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Power Global Tactical and Power Momentum Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Momentum Index and Power 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 Power Global Tactical are associated (or correlated) with Power Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Momentum Index has no effect on the direction of Power Global i.e., Power Global and Power Momentum go up and down completely randomly.
Pair Corralation between Power Global and Power Momentum
Assuming the 90 days horizon Power Global is expected to generate 2.25 times less return on investment than Power Momentum. But when comparing it to its historical volatility, Power Global Tactical is 2.58 times less risky than Power Momentum. It trades about 0.29 of its potential returns per unit of risk. Power Momentum Index is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,456 in Power Momentum Index on August 28, 2024 and sell it today you would earn a total of 81.00 from holding Power Momentum Index or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Global Tactical vs. Power Momentum Index
Performance |
| Timeline |
| Power Global Tactical |
| Power Momentum Index |
Power Global and Power Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Global and Power Momentum
The main advantage of trading using opposite Power Global and Power Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Global position performs unexpectedly, Power Momentum 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 Power Momentum will offset losses from the drop in Power Momentum's long position.| Power Global vs. Power Income Fund | Power Global vs. Power Income Fund | Power Global vs. Power Income Fund | Power Global vs. Power Momentum Index |
| Power Momentum vs. Power Income Fund | Power Momentum vs. Power Income Fund | Power Momentum vs. Power Income Fund | Power Momentum vs. Power Momentum Index |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |