Correlation Between Red Moon and Green Shift
Can any of the company-specific risk be diversified away by investing in both Red Moon and Green Shift 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 Red Moon and Green Shift into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Green Shift Commodities, you can compare the effects of market volatilities on Red Moon and Green Shift 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 Red Moon with a short position of Green Shift. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Green Shift.
Diversification Opportunities for Red Moon and Green Shift
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Red and Green is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Green Shift Commodities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Shift Commodities and Red Moon 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 Red Moon Resources are associated (or correlated) with Green Shift. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Shift Commodities has no effect on the direction of Red Moon i.e., Red Moon and Green Shift go up and down completely randomly.
Pair Corralation between Red Moon and Green Shift
Assuming the 90 days horizon Red Moon Resources is expected to generate 0.31 times more return on investment than Green Shift. However, Red Moon Resources is 3.22 times less risky than Green Shift. It trades about -0.04 of its potential returns per unit of risk. Green Shift Commodities is currently generating about -0.02 per unit of risk. If you would invest 48.00 in Red Moon Resources on November 1, 2024 and sell it today you would lose (4.00) from holding Red Moon Resources or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Red Moon Resources vs. Green Shift Commodities
Performance |
| Timeline |
| Red Moon Resources |
| Green Shift Commodities |
Red Moon and Green Shift Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Green Shift
The main advantage of trading using opposite Red Moon and Green Shift positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Green Shift 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 Green Shift will offset losses from the drop in Green Shift's long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Avarone Metals |
| Green Shift vs. Life Time Group | Green Shift vs. Sealed Air | Green Shift vs. Playtech plc | Green Shift vs. Kingboard Chemical Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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