Correlation Between Thermal Energy and Current Water
Can any of the company-specific risk be diversified away by investing in both Thermal Energy and Current Water 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 Current Water 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 Current Water Technologies, you can compare the effects of market volatilities on Thermal Energy and Current Water 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 Current Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and Current Water.
Diversification Opportunities for Thermal Energy and Current Water
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thermal and Current is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and Current Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Current Water Techno 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 Current Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Current Water Techno has no effect on the direction of Thermal Energy i.e., Thermal Energy and Current Water go up and down completely randomly.
Pair Corralation between Thermal Energy and Current Water
Assuming the 90 days horizon Thermal Energy International is expected to under-perform the Current Water. But the stock apears to be less risky and, when comparing its historical volatility, Thermal Energy International is 2.97 times less risky than Current Water. The stock trades about -0.02 of its potential returns per unit of risk. The Current Water Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Current Water Technologies on August 29, 2024 and sell it today you would lose (1.50) from holding Current Water Technologies or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermal Energy International vs. Current Water Technologies
Performance |
| Timeline |
| Thermal Energy Inter |
| Current Water Techno |
Thermal Energy and Current Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermal Energy and Current Water
The main advantage of trading using opposite Thermal Energy and Current Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermal Energy position performs unexpectedly, Current Water 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 Current Water will offset losses from the drop in Current Water's long position.| Thermal Energy vs. Environmental Waste International | Thermal Energy vs. Aurora Solar Technologies | Thermal Energy vs. Eguana Technologies | Thermal Energy vs. BioRem Inc |
| Current Water vs. Cielo Waste Solutions | Current Water vs. CHAR Technologies | Current Water vs. Forstrong Global Income | Current Water vs. Terreno Resources 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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