Correlation Between Eco Wave and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Eco Wave and TransAlta Corp 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 Eco Wave and TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Wave Power and TransAlta Corp, you can compare the effects of market volatilities on Eco Wave and TransAlta Corp 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 Eco Wave with a short position of TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Wave and TransAlta Corp.
Diversification Opportunities for Eco Wave and TransAlta Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eco and TransAlta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eco Wave Power and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp and Eco Wave 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 Eco Wave Power are associated (or correlated) with TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Eco Wave i.e., Eco Wave and TransAlta Corp go up and down completely randomly.
Pair Corralation between Eco Wave and TransAlta Corp
Given the investment horizon of 90 days Eco Wave Power is expected to generate 4.35 times more return on investment than TransAlta Corp. However, Eco Wave is 4.35 times more volatile than TransAlta Corp. It trades about 0.1 of its potential returns per unit of risk. TransAlta Corp is currently generating about 0.1 per unit of risk. If you would invest 1,015 in Eco Wave Power on August 27, 2024 and sell it today you would earn a total of 142.00 from holding Eco Wave Power or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Wave Power vs. TransAlta Corp
Performance |
| Timeline |
| Eco Wave Power |
| TransAlta Corp |
Eco Wave and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Wave and TransAlta Corp
The main advantage of trading using opposite Eco Wave and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Wave position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.| Eco Wave vs. Altius Renewable Royalties | Eco Wave vs. Alternus Energy Group | Eco Wave vs. Triad Pro Innovators | Eco Wave vs. American Security Resources |
| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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