Correlation Between ITALIAN WINE and CLEAN ENERGY
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and CLEAN ENERGY 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 ITALIAN WINE and CLEAN ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and CLEAN ENERGY FUELS, you can compare the effects of market volatilities on ITALIAN WINE and CLEAN ENERGY 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 ITALIAN WINE with a short position of CLEAN ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and CLEAN ENERGY.
Diversification Opportunities for ITALIAN WINE and CLEAN ENERGY
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between ITALIAN and CLEAN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and CLEAN ENERGY FUELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEAN ENERGY FUELS and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with CLEAN ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEAN ENERGY FUELS has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and CLEAN ENERGY go up and down completely randomly.
Pair Corralation between ITALIAN WINE and CLEAN ENERGY
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 0.58 times more return on investment than CLEAN ENERGY. However, ITALIAN WINE BRANDS is 1.74 times less risky than CLEAN ENERGY. It trades about 0.07 of its potential returns per unit of risk. CLEAN ENERGY FUELS is currently generating about 0.04 per unit of risk. If you would invest 1,653 in ITALIAN WINE BRANDS on November 1, 2024 and sell it today you would earn a total of 537.00 from holding ITALIAN WINE BRANDS or generate 32.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. CLEAN ENERGY FUELS
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| CLEAN ENERGY FUELS |
ITALIAN WINE and CLEAN ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and CLEAN ENERGY
The main advantage of trading using opposite ITALIAN WINE and CLEAN ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, CLEAN ENERGY 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 ENERGY will offset losses from the drop in CLEAN ENERGY's long position.| ITALIAN WINE vs. Motorcar Parts of | ITALIAN WINE vs. Verizon Communications | ITALIAN WINE vs. Telecom Argentina SA | ITALIAN WINE vs. GRUPO CARSO A1 |
| CLEAN ENERGY vs. ITALIAN WINE BRANDS | CLEAN ENERGY vs. LAir Liquide SA | CLEAN ENERGY vs. Treasury Wine Estates | CLEAN ENERGY vs. Norwegian Air Shuttle |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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