Correlation Between Environmental Clean and FireFly Metals

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

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

Diversification Opportunities for Environmental Clean and FireFly Metals

0.34

Correlation Coefficient

Environmental Clean  FireFly Metals

Weak diversification

The 3 months correlation between Environmental and FireFly is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Environmental Clean Technologi and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals and Environmental Clean 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 Environmental Clean Technologies are associated (or correlated) with FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of Environmental Clean i.e., Environmental Clean and FireFly Metals go up and down completely randomly.

Pair Corralation between Environmental Clean and FireFly Metals

Assuming the 90 days trading horizon Environmental Clean is expected to generate 1.09 times less return on investment than FireFly Metals. In addition to that, Environmental Clean is 3.47 times more volatile than FireFly Metals. It trades about 0.02 of its total potential returns per unit of risk. FireFly Metals is currently generating about 0.08 per unit of volatility. If you would invest  92.00  in FireFly Metals on December 25, 2024 and sell it today you would earn a total of  13.00  from holding FireFly Metals or generate 14.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Environmental Clean Technologi  vs.  FireFly Metals

Environmental Clean

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Environmental Clean Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Environmental Clean unveiled solid returns over the last few months and may actually be approaching a breakup point.

FireFly Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FireFly Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, FireFly Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Environmental Clean and FireFly Metals

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

The idea behind Environmental Clean Technologies and FireFly Metals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.