Correlation Between Impax Asset and BYD
Can any of the company-specific risk be diversified away by investing in both Impax Asset and BYD 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 Asset and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Asset Management and BYD Co, you can compare the effects of market volatilities on Impax Asset and BYD 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 Asset with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Asset and BYD.
Diversification Opportunities for Impax Asset and BYD
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Impax and BYD is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Impax Asset Management and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Impax Asset 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 Asset Management are associated (or correlated) with BYD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Impax Asset i.e., Impax Asset and BYD go up and down completely randomly.
Pair Corralation between Impax Asset and BYD
Assuming the 90 days trading horizon Impax Asset Management is expected to under-perform the BYD. But the stock apears to be less risky and, when comparing its historical volatility, Impax Asset Management is 5.95 times less risky than BYD. The stock trades about -0.07 of its potential returns per unit of risk. The BYD Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,505 in BYD Co on October 11, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Asset Management vs. BYD Co
Performance |
| Timeline |
| Impax Asset Management |
| BYD Co |
Impax Asset and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Asset and BYD
The main advantage of trading using opposite Impax Asset and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Asset position performs unexpectedly, BYD 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 BYD will offset losses from the drop in BYD's long position.| Impax Asset vs. Telecom Italia SpA | Impax Asset vs. HCA Healthcare | Impax Asset vs. Aeorema Communications Plc | Impax Asset vs. Medical Properties Trust |
| BYD vs. Charter Communications Cl | BYD vs. Batm Advanced Communications | BYD vs. Zoom Video Communications | BYD vs. Impax Asset Management |
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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