Correlation Between Impax Environmental and Lords Grp
Can any of the company-specific risk be diversified away by investing in both Impax Environmental and Lords Grp 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 Impax Environmental and Lords Grp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Environmental Markets and Lords Grp Trading, you can compare the effects of market volatilities on Impax Environmental and Lords Grp 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 Impax Environmental with a short position of Lords Grp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Environmental and Lords Grp.
Diversification Opportunities for Impax Environmental and Lords Grp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Impax and Lords is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and Lords Grp Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lords Grp Trading and Impax Environmental 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 Impax Environmental Markets are associated (or correlated) with Lords Grp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lords Grp Trading has no effect on the direction of Impax Environmental i.e., Impax Environmental and Lords Grp go up and down completely randomly.
Pair Corralation between Impax Environmental and Lords Grp
Assuming the 90 days trading horizon Impax Environmental Markets is expected to generate 0.43 times more return on investment than Lords Grp. However, Impax Environmental Markets is 2.33 times less risky than Lords Grp. It trades about 0.23 of its potential returns per unit of risk. Lords Grp Trading is currently generating about -0.19 per unit of risk. If you would invest 39,000 in Impax Environmental Markets on November 6, 2024 and sell it today you would earn a total of 1,700 from holding Impax Environmental Markets or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Environmental Markets vs. Lords Grp Trading
Performance |
| Timeline |
| Impax Environmental |
| Lords Grp Trading |
Impax Environmental and Lords Grp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Environmental and Lords Grp
The main advantage of trading using opposite Impax Environmental and Lords Grp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental position performs unexpectedly, Lords Grp 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 Lords Grp will offset losses from the drop in Lords Grp's long position.| Impax Environmental vs. Centaur Media | Impax Environmental vs. China Pacific Insurance | Impax Environmental vs. Zinc Media Group | Impax Environmental vs. Vulcan Materials Co |
| Lords Grp vs. Delta Air Lines | Lords Grp vs. Porvair plc | Lords Grp vs. Zoom Video Communications | Lords Grp vs. Alaska Air 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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