Correlation Between ManhattanLimited and Clean Air
Can any of the company-specific risk be diversified away by investing in both ManhattanLimited and Clean Air 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 ManhattanLimited and Clean Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manhattan Limited and Clean Air Metals, you can compare the effects of market volatilities on ManhattanLimited and Clean Air 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 ManhattanLimited with a short position of Clean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ManhattanLimited and Clean Air.
Diversification Opportunities for ManhattanLimited and Clean Air
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ManhattanLimited and Clean is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Manhattan Limited and Clean Air Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Air Metals and ManhattanLimited 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 Manhattan Limited are associated (or correlated) with Clean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Air Metals has no effect on the direction of ManhattanLimited i.e., ManhattanLimited and Clean Air go up and down completely randomly.
Pair Corralation between ManhattanLimited and Clean Air
Assuming the 90 days horizon Manhattan Limited is expected to generate 0.78 times more return on investment than Clean Air. However, Manhattan Limited is 1.28 times less risky than Clean Air. It trades about -0.3 of its potential returns per unit of risk. Clean Air Metals is currently generating about -0.29 per unit of risk. If you would invest 0.45 in Manhattan Limited on August 29, 2024 and sell it today you would lose (0.15) from holding Manhattan Limited or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manhattan Limited vs. Clean Air Metals
Performance |
| Timeline |
| Manhattan Limited |
| Clean Air Metals |
ManhattanLimited and Clean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ManhattanLimited and Clean Air
The main advantage of trading using opposite ManhattanLimited and Clean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ManhattanLimited position performs unexpectedly, Clean Air 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 Clean Air will offset losses from the drop in Clean Air's long position.| ManhattanLimited vs. Morningstar Unconstrained Allocation | ManhattanLimited vs. High Yield Municipal Fund | ManhattanLimited vs. Knife River | ManhattanLimited vs. Klckner Co SE |
| Clean Air vs. Morningstar Unconstrained Allocation | Clean Air vs. High Yield Municipal Fund | Clean Air vs. Knife River | Clean Air vs. Klckner Co SE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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