Correlation Between ITM Power and Quality Industrial
Can any of the company-specific risk be diversified away by investing in both ITM Power and Quality Industrial 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 ITM Power and Quality Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Power Plc and Quality Industrial Corp, you can compare the effects of market volatilities on ITM Power and Quality Industrial 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 ITM Power with a short position of Quality Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and Quality Industrial.
Diversification Opportunities for ITM Power and Quality Industrial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between ITM and Quality is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power Plc and Quality Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Industrial Corp and ITM Power 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 ITM Power Plc are associated (or correlated) with Quality Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Industrial Corp has no effect on the direction of ITM Power i.e., ITM Power and Quality Industrial go up and down completely randomly.
Pair Corralation between ITM Power and Quality Industrial
Assuming the 90 days horizon ITM Power Plc is expected to under-perform the Quality Industrial. But the pink sheet apears to be less risky and, when comparing its historical volatility, ITM Power Plc is 4.0 times less risky than Quality Industrial. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Quality Industrial Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5.36 in Quality Industrial Corp on September 1, 2024 and sell it today you would earn a total of 2.14 from holding Quality Industrial Corp or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ITM Power Plc vs. Quality Industrial Corp
Performance |
| Timeline |
| ITM Power Plc |
| Quality Industrial Corp |
ITM Power and Quality Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and Quality Industrial
The main advantage of trading using opposite ITM Power and Quality Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power position performs unexpectedly, Quality Industrial 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 Quality Industrial will offset losses from the drop in Quality Industrial's long position.| ITM Power vs. Next Hydrogen Solutions | ITM Power vs. Nel ASA | ITM Power vs. Titan Logix Corp | ITM Power vs. Weir Group PLC |
| Quality Industrial vs. GE Aerospace | Quality Industrial vs. Eaton PLC | Quality Industrial vs. Siemens AG Class | Quality Industrial vs. Parker Hannifin |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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