Correlation Between Vanguard Energy and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both Vanguard Energy and Firsthand Alternative 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 Vanguard Energy and Firsthand Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Energy Index and Firsthand Alternative Energy, you can compare the effects of market volatilities on Vanguard Energy and Firsthand Alternative 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 Vanguard Energy with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Energy and Firsthand Alternative.
Diversification Opportunities for Vanguard Energy and Firsthand Alternative
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Firsthand is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Energy Index and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and Vanguard 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 Vanguard Energy Index are associated (or correlated) with Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Vanguard Energy i.e., Vanguard Energy and Firsthand Alternative go up and down completely randomly.
Pair Corralation between Vanguard Energy and Firsthand Alternative
Assuming the 90 days horizon Vanguard Energy Index is expected to generate 0.63 times more return on investment than Firsthand Alternative. However, Vanguard Energy Index is 1.59 times less risky than Firsthand Alternative. It trades about -0.11 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.1 per unit of risk. If you would invest 6,344 in Vanguard Energy Index on October 11, 2024 and sell it today you would lose (178.00) from holding Vanguard Energy Index or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Energy Index vs. Firsthand Alternative Energy
Performance |
| Timeline |
| Vanguard Energy Index |
| Firsthand Alternative |
Vanguard Energy and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Energy and Firsthand Alternative
The main advantage of trading using opposite Vanguard Energy and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Energy position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's long position.| Vanguard Energy vs. Vanguard Financials Index | Vanguard Energy vs. Vanguard Utilities Index | Vanguard Energy vs. Vanguard Materials Index | Vanguard Energy vs. Vanguard Sumer Staples |
| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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