Correlation Between ESGL Holdings and Dividend

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

By analyzing existing cross correlation between ESGL Holdings Limited and Dividend 15 Split, you can compare the effects of market volatilities on ESGL Holdings and Dividend 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 ESGL Holdings with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Dividend.

Diversification Opportunities for ESGL Holdings and Dividend

0.61

Correlation Coefficient

ESGL Holdings  Dividend

Poor diversification

The 3 months correlation between ESGL and Dividend is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Dividend go up and down completely randomly.

Pair Corralation between ESGL Holdings and Dividend

Assuming the 90 days horizon ESGL Holdings Limited is expected to generate 336.82 times more return on investment than Dividend. However, ESGL Holdings is 336.82 times more volatile than Dividend 15 Split. It trades about 0.25 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.09 per unit of risk. If you would invest  13,500  in ESGL Holdings Limited on October 3, 2024 and sell it today you would lose (13,499) from holding ESGL Holdings Limited or give up 99.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.31%
Values	Daily Returns

ESGL Holdings Limited  vs.  Dividend 15 Split

ESGL Holdings Limited

Risk-Adjusted Performance

5 of 100

Modest

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

Dividend 15 Split

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ESGL Holdings and Dividend

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

The idea behind ESGL Holdings Limited and Dividend 15 Split 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.