Correlation Between Environmental Clean and Insignia Financial

Can any of the company-specific risk be diversified away by investing in both Environmental Clean and Insignia Financial 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 Environmental Clean and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Environmental Clean Technologies and Insignia Financial, you can compare the effects of market volatilities on Environmental Clean and Insignia Financial 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 Environmental Clean with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental Clean and Insignia Financial.

Diversification Opportunities for Environmental Clean and Insignia Financial

-0.39

Correlation Coefficient

Environmental Clean  Insignia Financial

Very good diversification

The 3 months correlation between Environmental and Insignia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Environmental Clean Technologi and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Environmental Clean 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 Environmental Clean Technologies are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Environmental Clean i.e., Environmental Clean and Insignia Financial go up and down completely randomly.

Pair Corralation between Environmental Clean and Insignia Financial

Assuming the 90 days trading horizon Environmental Clean is expected to generate 5.37 times less return on investment than Insignia Financial. In addition to that, Environmental Clean is 2.03 times more volatile than Insignia Financial. It trades about 0.02 of its total potential returns per unit of risk. Insignia Financial is currently generating about 0.21 per unit of volatility. If you would invest  237.00  in Insignia Financial on September 12, 2024 and sell it today you would earn a total of  69.00  from holding Insignia Financial or generate 29.11% return on investment over 90 days.

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

Environmental Clean Technologi  vs.  Insignia Financial

Environmental Clean

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Environmental Clean Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Environmental Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Insignia Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Environmental Clean and Insignia Financial

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

The idea behind Environmental Clean Technologies and Insignia Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..