Correlation Between Northstar Clean and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Lycos 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 Northstar Clean and Lycos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and Lycos Energy, you can compare the effects of market volatilities on Northstar Clean and Lycos 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 Northstar Clean with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Lycos Energy.
Diversification Opportunities for Northstar Clean and Lycos Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northstar and Lycos is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Northstar Clean i.e., Northstar Clean and Lycos Energy go up and down completely randomly.
Pair Corralation between Northstar Clean and Lycos Energy
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 0.7 times more return on investment than Lycos Energy. However, Northstar Clean Technologies is 1.42 times less risky than Lycos Energy. It trades about -0.1 of its potential returns per unit of risk. Lycos Energy is currently generating about -0.12 per unit of risk. If you would invest 39.00 in Northstar Clean Technologies on October 28, 2024 and sell it today you would lose (2.00) from holding Northstar Clean Technologies or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. Lycos Energy
Performance |
| Timeline |
| Northstar Clean Tech |
| Lycos Energy |
Northstar Clean and Lycos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and Lycos Energy
The main advantage of trading using opposite Northstar Clean and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, Lycos 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 Lycos Energy will offset losses from the drop in Lycos Energy's long position.The idea behind Northstar Clean Technologies and Lycos Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lycos Energy vs. Maple Leaf Foods | Lycos Energy vs. Western Investment | Lycos Energy vs. Advent Wireless | Lycos Energy vs. 2028 Investment Grade |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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