Correlation Between Impax Environmental and Gaming Realms

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Can any of the company-specific risk be diversified away by investing in both Impax Environmental and Gaming Realms 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 Impax Environmental and Gaming Realms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Environmental Markets and Gaming Realms plc, you can compare the effects of market volatilities on Impax Environmental and Gaming Realms 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 Impax Environmental with a short position of Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Environmental and Gaming Realms.

Diversification Opportunities for Impax Environmental and Gaming Realms

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Impax and Gaming is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc and Impax 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 Impax Environmental Markets are associated (or correlated) with Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Impax Environmental i.e., Impax Environmental and Gaming Realms go up and down completely randomly.

Pair Corralation between Impax Environmental and Gaming Realms

Assuming the 90 days trading horizon Impax Environmental Markets is expected to under-perform the Gaming Realms. But the stock apears to be less risky and, when comparing its historical volatility, Impax Environmental Markets is 2.38 times less risky than Gaming Realms. The stock trades about -0.01 of its potential returns per unit of risk. The Gaming Realms plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Gaming Realms plc on September 23, 2024 and sell it today you would earn a total of  1,195  from holding Gaming Realms plc or generate 47.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Impax Environmental Markets  vs.  Gaming Realms plc

 Performance 
       Timeline  
Impax Environmental 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Impax Environmental Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Impax Environmental is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Gaming Realms plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gaming Realms is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Impax Environmental and Gaming Realms Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Impax Environmental and Gaming Realms

The main advantage of trading using opposite Impax Environmental and Gaming Realms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental position performs unexpectedly, Gaming Realms 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 Gaming Realms will offset losses from the drop in Gaming Realms' long position.
The idea behind Impax Environmental Markets and Gaming Realms plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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