Correlation Between Firsthand Alternative and Short Real

Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Short Real 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 Firsthand Alternative and Short Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Firsthand Alternative Energy and Short Real Estate, you can compare the effects of market volatilities on Firsthand Alternative and Short Real 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 Firsthand Alternative with a short position of Short Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Short Real.

Diversification Opportunities for Firsthand Alternative and Short Real

-0.58

Correlation Coefficient

Firsthand Alternative  Short Real

Excellent diversification

The 3 months correlation between Firsthand and Short is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Short Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Real Estate and Firsthand Alternative 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 Firsthand Alternative Energy are associated (or correlated) with Short Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Real Estate has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Short Real go up and down completely randomly.

Pair Corralation between Firsthand Alternative and Short Real

Assuming the 90 days horizon Firsthand Alternative Energy is expected to generate 1.86 times more return on investment than Short Real. However, Firsthand Alternative is 1.86 times more volatile than Short Real Estate. It trades about -0.01 of its potential returns per unit of risk. Short Real Estate is currently generating about -0.04 per unit of risk. If you would invest  1,016  in Firsthand Alternative Energy on September 29, 2024 and sell it today you would lose (34.00) from holding Firsthand Alternative Energy or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Firsthand Alternative Energy  vs.  Short Real Estate

Firsthand Alternative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Firsthand Alternative Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Short Real Estate

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Real Estate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Firsthand Alternative and Short Real

The main advantage of trading using opposite Firsthand Alternative and Short Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Short Real 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 Short Real will offset losses from the drop in Short Real's long position.

The idea behind Firsthand Alternative Energy and Short Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.