Correlation Between DIRTT Environmental and Clear Blue

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

By analyzing existing cross correlation between DIRTT Environmental Solutions and Clear Blue Technologies, you can compare the effects of market volatilities on DIRTT Environmental and Clear Blue 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 DIRTT Environmental with a short position of Clear Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIRTT Environmental and Clear Blue.

Diversification Opportunities for DIRTT Environmental and Clear Blue

0.6

Correlation Coefficient

DIRTT Environmental  Clear Blue

Poor diversification

The 3 months correlation between DIRTT and Clear is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding DIRTT Environmental Solutions and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies and DIRTT Environmental 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 DIRTT Environmental Solutions are associated (or correlated) with Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of DIRTT Environmental i.e., DIRTT Environmental and Clear Blue go up and down completely randomly.

Pair Corralation between DIRTT Environmental and Clear Blue

Assuming the 90 days trading horizon DIRTT Environmental is expected to generate 3.9 times less return on investment than Clear Blue. But when comparing it to its historical volatility, DIRTT Environmental Solutions is 3.08 times less risky than Clear Blue. It trades about 0.05 of its potential returns per unit of risk. Clear Blue Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Clear Blue Technologies on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Clear Blue Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

DIRTT Environmental Solutions  vs.  Clear Blue Technologies

DIRTT Environmental

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DIRTT Environmental Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIRTT Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Clear Blue Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clear Blue Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Clear Blue showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIRTT Environmental and Clear Blue

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

The idea behind DIRTT Environmental Solutions and Clear Blue Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.