Correlation Between New Germany and Tortoise Energy

Can any of the company-specific risk be diversified away by investing in both New Germany and Tortoise Energy 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 New Germany and Tortoise Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Germany Closed and Tortoise Energy Independence, you can compare the effects of market volatilities on New Germany and Tortoise Energy 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 New Germany with a short position of Tortoise Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Germany and Tortoise Energy.

Diversification Opportunities for New Germany and Tortoise Energy

-0.64

Correlation Coefficient

New Germany  Tortoise Energy

Excellent diversification

The 3 months correlation between New and Tortoise is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding New Germany Closed and Tortoise Energy Independence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Energy Inde and New Germany 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 New Germany Closed are associated (or correlated) with Tortoise Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Energy Inde has no effect on the direction of New Germany i.e., New Germany and Tortoise Energy go up and down completely randomly.

Pair Corralation between New Germany and Tortoise Energy

Allowing for the 90-day total investment horizon New Germany Closed is expected to under-perform the Tortoise Energy. But the fund apears to be less risky and, when comparing its historical volatility, New Germany Closed is 1.24 times less risky than Tortoise Energy. The fund trades about -0.06 of its potential returns per unit of risk. The Tortoise Energy Independence is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,724  in Tortoise Energy Independence on September 1, 2024 and sell it today you would earn a total of  686.00  from holding Tortoise Energy Independence or generate 18.42% return on investment over 90 days.

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

New Germany Closed  vs.  Tortoise Energy Independence

New Germany Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Germany Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, New Germany is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tortoise Energy Inde

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Independence are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile fundamental indicators, Tortoise Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Germany and Tortoise Energy

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

The idea behind New Germany Closed and Tortoise Energy Independence 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.