Correlation Between Clime Investment and Challenger

Can any of the company-specific risk be diversified away by investing in both Clime Investment and Challenger 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 Challenger 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 Challenger, you can compare the effects of market volatilities on Clime Investment and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Challenger.

Diversification Opportunities for Clime Investment and Challenger

-0.45

Correlation Coefficient

Clime Investment  Challenger

Very good diversification

The 3 months correlation between Clime and Challenger is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Clime Investment i.e., Clime Investment and Challenger go up and down completely randomly.

Pair Corralation between Clime Investment and Challenger

Assuming the 90 days trading horizon Clime Investment Management is expected to generate 1.07 times more return on investment than Challenger. However, Clime Investment is 1.07 times more volatile than Challenger. It trades about 0.05 of its potential returns per unit of risk. Challenger is currently generating about -0.09 per unit of risk. If you would invest  33.00  in Clime Investment Management on September 3, 2024 and sell it today you would earn a total of  2.00  from holding Clime Investment Management or generate 6.06% return on investment over 90 days.

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

Clime Investment Management  vs.  Challenger

Clime Investment Man

Risk-Adjusted Performance

4 of 100

Insignificant

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 January 2025.

Challenger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Challenger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Clime Investment and Challenger

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

The idea behind Clime Investment Management and Challenger 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.