Correlation Between EcoPlus and Greenwave Technology

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

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

Diversification Opportunities for EcoPlus and Greenwave Technology

0.62

Correlation Coefficient

EcoPlus  Greenwave Technology

Poor diversification

The 3 months correlation between EcoPlus and Greenwave is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding EcoPlus and Greenwave Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenwave Technology and EcoPlus 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 EcoPlus are associated (or correlated) with Greenwave Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenwave Technology has no effect on the direction of EcoPlus i.e., EcoPlus and Greenwave Technology go up and down completely randomly.

Pair Corralation between EcoPlus and Greenwave Technology

Given the investment horizon of 90 days EcoPlus is expected to generate 1.95 times more return on investment than Greenwave Technology. However, EcoPlus is 1.95 times more volatile than Greenwave Technology Solutions. It trades about 0.1 of its potential returns per unit of risk. Greenwave Technology Solutions is currently generating about -0.05 per unit of risk. If you would invest  2.99  in EcoPlus on September 14, 2024 and sell it today you would lose (0.29) from holding EcoPlus or give up 9.7% of portfolio value over 90 days.

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

EcoPlus  vs.  Greenwave Technology Solutions

EcoPlus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EcoPlus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, EcoPlus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Greenwave Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenwave Technology Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Greenwave Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EcoPlus and Greenwave Technology

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

The idea behind EcoPlus and Greenwave Technology Solutions 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.