Correlation Between Coherent and Global Warming

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

By analyzing existing cross correlation between Coherent and Global Warming Solut, you can compare the effects of market volatilities on Coherent and Global Warming 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 Coherent with a short position of Global Warming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coherent and Global Warming.

Diversification Opportunities for Coherent and Global Warming

0.61

Correlation Coefficient

Coherent  Global Warming

Poor diversification

The 3 months correlation between Coherent and Global is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coherent and Global Warming Solut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Warming Solut and Coherent 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 Coherent are associated (or correlated) with Global Warming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Warming Solut has no effect on the direction of Coherent i.e., Coherent and Global Warming go up and down completely randomly.

Pair Corralation between Coherent and Global Warming

Given the investment horizon of 90 days Coherent is expected to generate 0.3 times more return on investment than Global Warming. However, Coherent is 3.32 times less risky than Global Warming. It trades about 0.18 of its potential returns per unit of risk. Global Warming Solut is currently generating about -0.01 per unit of risk. If you would invest  9,535  in Coherent on September 18, 2024 and sell it today you would earn a total of  1,250  from holding Coherent or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Coherent  vs.  Global Warming Solut

Coherent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Global Warming Solut

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Warming Solut are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Warming displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coherent and Global Warming

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

The idea behind Coherent and Global Warming Solut 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.