Correlation Between Peak Resources and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both Peak Resources and BROADWIND ENRGY 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 Peak Resources and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and BROADWIND ENRGY, you can compare the effects of market volatilities on Peak Resources and BROADWIND ENRGY 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 Peak Resources with a short position of BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and BROADWIND ENRGY.
Diversification Opportunities for Peak Resources and BROADWIND ENRGY
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peak and BROADWIND is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and Peak Resources 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 Peak Resources Limited are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Peak Resources i.e., Peak Resources and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between Peak Resources and BROADWIND ENRGY
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the BROADWIND ENRGY. In addition to that, Peak Resources is 2.93 times more volatile than BROADWIND ENRGY. It trades about -0.09 of its total potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.08 per unit of volatility. If you would invest 186.00 in BROADWIND ENRGY on September 3, 2024 and sell it today you would lose (18.00) from holding BROADWIND ENRGY or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peak Resources Limited vs. BROADWIND ENRGY
Performance |
| Timeline |
| Peak Resources |
| BROADWIND ENRGY |
Peak Resources and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and BROADWIND ENRGY
The main advantage of trading using opposite Peak Resources and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| Peak Resources vs. Peak Minerals Limited | Peak Resources vs. Anheuser Busch InBev SANV | Peak Resources vs. AALBERTS IND | Peak Resources vs. SECURITAS B |
| BROADWIND ENRGY vs. TOTAL GABON | BROADWIND ENRGY vs. Walgreens Boots Alliance | BROADWIND ENRGY vs. Peak Resources Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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