Correlation Between Greencoat Renewables and Cairn Homes

Can any of the company-specific risk be diversified away by investing in both Greencoat Renewables and Cairn Homes 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 Greencoat Renewables and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greencoat Renewables PLC and Cairn Homes PLC, you can compare the effects of market volatilities on Greencoat Renewables and Cairn Homes 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 Greencoat Renewables with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greencoat Renewables and Cairn Homes.

Diversification Opportunities for Greencoat Renewables and Cairn Homes

-0.63

Correlation Coefficient

Greencoat Renewables  Cairn Homes

Excellent diversification

The 3 months correlation between Greencoat and Cairn is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Greencoat Renewables PLC and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Greencoat Renewables 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 Greencoat Renewables PLC are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Greencoat Renewables i.e., Greencoat Renewables and Cairn Homes go up and down completely randomly.

Pair Corralation between Greencoat Renewables and Cairn Homes

Assuming the 90 days trading horizon Greencoat Renewables PLC is expected to under-perform the Cairn Homes. But the stock apears to be less risky and, when comparing its historical volatility, Greencoat Renewables PLC is 1.35 times less risky than Cairn Homes. The stock trades about -0.15 of its potential returns per unit of risk. The Cairn Homes PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Cairn Homes PLC on September 17, 2024 and sell it today you would earn a total of  47.00  from holding Cairn Homes PLC or generate 25.27% return on investment over 90 days.

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

Greencoat Renewables PLC  vs.  Cairn Homes PLC

Greencoat Renewables PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greencoat Renewables PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Cairn Homes PLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cairn Homes PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Cairn Homes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greencoat Renewables and Cairn Homes

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

The idea behind Greencoat Renewables PLC and Cairn Homes PLC 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.