Correlation Between Clime Investment and Blue Moon

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

By analyzing existing cross correlation between Clime Investment Management and Blue Moon Metals, you can compare the effects of market volatilities on Clime Investment and Blue Moon 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 Clime Investment with a short position of Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Blue Moon.

Diversification Opportunities for Clime Investment and Blue Moon

0.16

Correlation Coefficient

Clime Investment  Blue Moon

Average diversification

The 3 months correlation between Clime and Blue is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals and Clime Investment 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 Clime Investment Management are associated (or correlated) with Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Clime Investment i.e., Clime Investment and Blue Moon go up and down completely randomly.

Pair Corralation between Clime Investment and Blue Moon

Assuming the 90 days horizon Clime Investment Management is expected to generate 6.72 times more return on investment than Blue Moon. However, Clime Investment is 6.72 times more volatile than Blue Moon Metals. It trades about 0.02 of its potential returns per unit of risk. Blue Moon Metals is currently generating about 0.15 per unit of risk. If you would invest  0.10  in Clime Investment Management on September 13, 2024 and sell it today you would lose (0.09) from holding Clime Investment Management or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Clime Investment Management  vs.  Blue Moon Metals

Clime Investment Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clime Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Blue Moon Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clime Investment and Blue Moon

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

The idea behind Clime Investment Management and Blue Moon 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.