Correlation Between TRAINLINE PLC and BROADWIND ENRGY

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and BROADWIND ENRGY 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 TRAINLINE PLC and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for TRAINLINE PLC and BROADWIND ENRGY

-0.75

Correlation Coefficient

TRAINLINE PLC  BROADWIND ENRGY

Pay attention - limited upside

The 3 months correlation between TRAINLINE and BROADWIND is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and BROADWIND ENRGY

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 0.61 times more return on investment than BROADWIND ENRGY. However, TRAINLINE PLC LS is 1.65 times less risky than BROADWIND ENRGY. It trades about 0.2 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about 0.0 per unit of risk. If you would invest  384.00  in TRAINLINE PLC LS on October 5, 2024 and sell it today you would earn a total of  116.00  from holding TRAINLINE PLC LS or generate 30.21% return on investment over 90 days.

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

TRAINLINE PLC LS  vs.  BROADWIND ENRGY

TRAINLINE PLC LS

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, TRAINLINE PLC reported solid returns over the last few months and may actually be approaching a breakup point.

BROADWIND ENRGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BROADWIND ENRGY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TRAINLINE PLC and BROADWIND ENRGY

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

The idea behind TRAINLINE PLC LS and BROADWIND ENRGY 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..