Correlation Between Clime Investment and Alternative Investment

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

By analyzing existing cross correlation between Clime Investment Management and Alternative Investment Trust, you can compare the effects of market volatilities on Clime Investment and Alternative Investment 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 Clime Investment with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Alternative Investment.

Diversification Opportunities for Clime Investment and Alternative Investment

0.65

Correlation Coefficient

Clime Investment  Alternative Investment

Poor diversification

The 3 months correlation between Clime and Alternative is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and Clime Investment 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 Clime Investment Management are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Clime Investment i.e., Clime Investment and Alternative Investment go up and down completely randomly.

Pair Corralation between Clime Investment and Alternative Investment

Assuming the 90 days trading horizon Clime Investment is expected to generate 2.05 times less return on investment than Alternative Investment. In addition to that, Clime Investment is 1.42 times more volatile than Alternative Investment Trust. It trades about 0.05 of its total potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.16 per unit of volatility. If you would invest  125.00  in Alternative Investment Trust on August 31, 2024 and sell it today you would earn a total of  19.00  from holding Alternative Investment Trust or generate 15.2% return on investment over 90 days.

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

Clime Investment Management  vs.  Alternative Investment Trust

Clime Investment Man

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Clime Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Alternative Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alternative Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clime Investment and Alternative Investment

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

The idea behind Clime Investment Management and Alternative Investment Trust 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.