Correlation Between Tatton Asset and ITM Power
Can any of the company-specific risk be diversified away by investing in both Tatton Asset and ITM Power 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 Tatton Asset and ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tatton Asset Management and ITM Power, you can compare the effects of market volatilities on Tatton Asset and ITM Power 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 Tatton Asset with a short position of ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatton Asset and ITM Power.
Diversification Opportunities for Tatton Asset and ITM Power
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tatton and ITM is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tatton Asset Management and ITM Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power and Tatton Asset 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 Tatton Asset Management are associated (or correlated) with ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power has no effect on the direction of Tatton Asset i.e., Tatton Asset and ITM Power go up and down completely randomly.
Pair Corralation between Tatton Asset and ITM Power
Assuming the 90 days trading horizon Tatton Asset Management is expected to under-perform the ITM Power. But the stock apears to be less risky and, when comparing its historical volatility, Tatton Asset Management is 2.57 times less risky than ITM Power. The stock trades about -0.13 of its potential returns per unit of risk. The ITM Power is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,620 in ITM Power on October 25, 2024 and sell it today you would lose (194.00) from holding ITM Power or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tatton Asset Management vs. ITM Power
Performance |
| Timeline |
| Tatton Asset Management |
| ITM Power |
Tatton Asset and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tatton Asset and ITM Power
The main advantage of trading using opposite Tatton Asset and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatton Asset position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Tatton Asset vs. Discover Financial Services | Tatton Asset vs. Manulife Financial Corp | Tatton Asset vs. Berner Kantonalbank AG | Tatton Asset vs. Qurate Retail Series |
| ITM Power vs. Thor Mining PLC | ITM Power vs. Europa Metals | ITM Power vs. Wheaton Precious Metals | ITM Power vs. Chrysalis Investments |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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