Correlation Between VPC Specialty and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both VPC Specialty and CleanTech Lithium 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 VPC Specialty and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VPC Specialty Lending and CleanTech Lithium plc, you can compare the effects of market volatilities on VPC Specialty and CleanTech Lithium 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 VPC Specialty with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of VPC Specialty and CleanTech Lithium.
Diversification Opportunities for VPC Specialty and CleanTech Lithium
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VPC and CleanTech is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding VPC Specialty Lending and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and VPC Specialty 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 VPC Specialty Lending are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of VPC Specialty i.e., VPC Specialty and CleanTech Lithium go up and down completely randomly.
Pair Corralation between VPC Specialty and CleanTech Lithium
Assuming the 90 days trading horizon VPC Specialty Lending is expected to generate 0.47 times more return on investment than CleanTech Lithium. However, VPC Specialty Lending is 2.11 times less risky than CleanTech Lithium. It trades about 0.11 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about 0.02 per unit of risk. If you would invest 2,735 in VPC Specialty Lending on November 6, 2024 and sell it today you would earn a total of 115.00 from holding VPC Specialty Lending or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VPC Specialty Lending vs. CleanTech Lithium plc
Performance |
| Timeline |
| VPC Specialty Lending |
| CleanTech Lithium plc |
VPC Specialty and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VPC Specialty and CleanTech Lithium
The main advantage of trading using opposite VPC Specialty and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VPC Specialty position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| VPC Specialty vs. International Biotechnology Trust | VPC Specialty vs. Scandinavian Tobacco Group | VPC Specialty vs. Auto Trader Group | VPC Specialty vs. Allianz Technology Trust |
| CleanTech Lithium vs. Gamma Communications PLC | CleanTech Lithium vs. Verizon Communications | CleanTech Lithium vs. Clean Power Hydrogen | CleanTech Lithium vs. Fonix Mobile plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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