Correlation Between LifeSafe Holdings and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both LifeSafe Holdings and Impax Environmental 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 LifeSafe Holdings and Impax Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LifeSafe Holdings PLC and Impax Environmental Markets, you can compare the effects of market volatilities on LifeSafe Holdings and Impax Environmental 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 LifeSafe Holdings with a short position of Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifeSafe Holdings and Impax Environmental.
Diversification Opportunities for LifeSafe Holdings and Impax Environmental
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LifeSafe and Impax is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LifeSafe Holdings PLC and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental and LifeSafe Holdings 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 LifeSafe Holdings PLC are associated (or correlated) with Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of LifeSafe Holdings i.e., LifeSafe Holdings and Impax Environmental go up and down completely randomly.
Pair Corralation between LifeSafe Holdings and Impax Environmental
Assuming the 90 days trading horizon LifeSafe Holdings PLC is expected to under-perform the Impax Environmental. In addition to that, LifeSafe Holdings is 2.76 times more volatile than Impax Environmental Markets. It trades about -0.28 of its total potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.31 per unit of volatility. If you would invest 39,900 in Impax Environmental Markets on September 12, 2024 and sell it today you would lose (1,900) from holding Impax Environmental Markets or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LifeSafe Holdings PLC vs. Impax Environmental Markets
Performance |
| Timeline |
| LifeSafe Holdings PLC |
| Impax Environmental |
LifeSafe Holdings and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LifeSafe Holdings and Impax Environmental
The main advantage of trading using opposite LifeSafe Holdings and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeSafe Holdings position performs unexpectedly, Impax Environmental 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| LifeSafe Holdings vs. Impax Environmental Markets | LifeSafe Holdings vs. Compal Electronics GDR | LifeSafe Holdings vs. Gaming Realms plc | LifeSafe Holdings vs. Verizon Communications |
| Impax Environmental vs. Samsung Electronics Co | Impax Environmental vs. Samsung Electronics Co | Impax Environmental vs. Hyundai Motor | Impax Environmental vs. Toyota Motor Corp |
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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