Correlation Between SERI INDUSTRIAL and Greencoat
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and Greencoat 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 SERI INDUSTRIAL and Greencoat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and Greencoat UK Wind, you can compare the effects of market volatilities on SERI INDUSTRIAL and Greencoat 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 SERI INDUSTRIAL with a short position of Greencoat. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and Greencoat.
Diversification Opportunities for SERI INDUSTRIAL and Greencoat
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SERI and Greencoat is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and Greencoat UK Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat UK Wind and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with Greencoat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat UK Wind has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Greencoat go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and Greencoat
Assuming the 90 days trading horizon SERI INDUSTRIAL is expected to generate 2.06 times less return on investment than Greencoat. In addition to that, SERI INDUSTRIAL is 1.77 times more volatile than Greencoat UK Wind. It trades about 0.02 of its total potential returns per unit of risk. Greencoat UK Wind is currently generating about 0.06 per unit of volatility. If you would invest 145.00 in Greencoat UK Wind on September 15, 2024 and sell it today you would earn a total of 5.00 from holding Greencoat UK Wind or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. Greencoat UK Wind
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| Greencoat UK Wind |
SERI INDUSTRIAL and Greencoat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and Greencoat
The main advantage of trading using opposite SERI INDUSTRIAL and Greencoat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL position performs unexpectedly, Greencoat 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 Greencoat will offset losses from the drop in Greencoat's long position.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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