Correlation Between Thermal Energy and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Thermal Energy and ECN Capital 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 Thermal Energy and ECN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermal Energy International and ECN Capital Corp, you can compare the effects of market volatilities on Thermal Energy and ECN Capital 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 Thermal Energy with a short position of ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and ECN Capital.
Diversification Opportunities for Thermal Energy and ECN Capital
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thermal and ECN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp and Thermal Energy 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 Thermal Energy International are associated (or correlated) with ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Thermal Energy i.e., Thermal Energy and ECN Capital go up and down completely randomly.
Pair Corralation between Thermal Energy and ECN Capital
Assuming the 90 days horizon Thermal Energy International is expected to generate 1.45 times more return on investment than ECN Capital. However, Thermal Energy is 1.45 times more volatile than ECN Capital Corp. It trades about 0.04 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.03 per unit of risk. If you would invest 11.00 in Thermal Energy International on November 19, 2024 and sell it today you would earn a total of 4.00 from holding Thermal Energy International or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermal Energy International vs. ECN Capital Corp
Performance |
| Timeline |
| Thermal Energy Inter |
| ECN Capital Corp |
Thermal Energy and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermal Energy and ECN Capital
The main advantage of trading using opposite Thermal Energy and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermal Energy position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital's long position.| Thermal Energy vs. Aurora Solar Technologies | Thermal Energy vs. Eguana Technologies | Thermal Energy vs. BioRem Inc | Thermal Energy vs. Current Water Technologies |
| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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