Correlation Between GREENWICH ASSET and INTERNATIONAL ENERGY

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

By analyzing existing cross correlation between GREENWICH ASSET ETF and INTERNATIONAL ENERGY INSURANCE, you can compare the effects of market volatilities on GREENWICH ASSET and INTERNATIONAL ENERGY 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 GREENWICH ASSET with a short position of INTERNATIONAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENWICH ASSET and INTERNATIONAL ENERGY.

Diversification Opportunities for GREENWICH ASSET and INTERNATIONAL ENERGY

0.62

Correlation Coefficient

GREENWICH ASSET  INTERNATIONAL ENERGY

Poor diversification

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

Pair Corralation between GREENWICH ASSET and INTERNATIONAL ENERGY

Assuming the 90 days trading horizon GREENWICH ASSET ETF is expected to under-perform the INTERNATIONAL ENERGY. In addition to that, GREENWICH ASSET is 1.42 times more volatile than INTERNATIONAL ENERGY INSURANCE. It trades about -0.17 of its total potential returns per unit of risk. INTERNATIONAL ENERGY INSURANCE is currently generating about -0.07 per unit of volatility. If you would invest  157.00  in INTERNATIONAL ENERGY INSURANCE on September 5, 2024 and sell it today you would lose (21.00) from holding INTERNATIONAL ENERGY INSURANCE or give up 13.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

GREENWICH ASSET ETF  vs.  INTERNATIONAL ENERGY INSURANCE

GREENWICH ASSET ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENWICH ASSET ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

INTERNATIONAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL ENERGY INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GREENWICH ASSET and INTERNATIONAL ENERGY

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

The idea behind GREENWICH ASSET ETF and INTERNATIONAL ENERGY INSURANCE 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.