Correlation Between Signal Hill and Clean Earth
Can any of the company-specific risk be diversified away by investing in both Signal Hill and Clean Earth 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 Signal Hill and Clean Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signal Hill Acquisition and Clean Earth Acquisitions, you can compare the effects of market volatilities on Signal Hill and Clean Earth 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 Signal Hill with a short position of Clean Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signal Hill and Clean Earth.
Diversification Opportunities for Signal Hill and Clean Earth
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Signal and Clean is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Signal Hill Acquisition and Clean Earth Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Earth Acquisitions and Signal Hill 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 Signal Hill Acquisition are associated (or correlated) with Clean Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Earth Acquisitions has no effect on the direction of Signal Hill i.e., Signal Hill and Clean Earth go up and down completely randomly.
Pair Corralation between Signal Hill and Clean Earth
If you would invest 1,058 in Clean Earth Acquisitions on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Clean Earth Acquisitions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Signal Hill Acquisition vs. Clean Earth Acquisitions
Performance |
| Timeline |
| Signal Hill Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Clean Earth Acquisitions |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Signal Hill and Clean Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Signal Hill and Clean Earth
The main advantage of trading using opposite Signal Hill and Clean Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signal Hill position performs unexpectedly, Clean Earth 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 Earth will offset losses from the drop in Clean Earth's long position.The idea behind Signal Hill Acquisition and Clean Earth Acquisitions 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.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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