Correlation Between Main Thematic and Changebridge Capital

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

By analyzing existing cross correlation between Main Thematic Innovation and Changebridge Capital Sustainable, you can compare the effects of market volatilities on Main Thematic and Changebridge Capital 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 Main Thematic with a short position of Changebridge Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Thematic and Changebridge Capital.

Diversification Opportunities for Main Thematic and Changebridge Capital

0.97

Correlation Coefficient

Main Thematic  Changebridge Capital

Almost no diversification

The 3 months correlation between Main and Changebridge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and Changebridge Capital Sustainab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changebridge Capital and Main Thematic 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 Main Thematic Innovation are associated (or correlated) with Changebridge Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changebridge Capital has no effect on the direction of Main Thematic i.e., Main Thematic and Changebridge Capital go up and down completely randomly.

Pair Corralation between Main Thematic and Changebridge Capital

Given the investment horizon of 90 days Main Thematic Innovation is expected to generate 1.3 times more return on investment than Changebridge Capital. However, Main Thematic is 1.3 times more volatile than Changebridge Capital Sustainable. It trades about 0.09 of its potential returns per unit of risk. Changebridge Capital Sustainable is currently generating about 0.11 per unit of risk. If you would invest  1,613  in Main Thematic Innovation on October 12, 2024 and sell it today you would earn a total of  492.00  from holding Main Thematic Innovation or generate 30.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.47%
Values	Daily Returns

Main Thematic Innovation  vs.  Changebridge Capital Sustainab

Main Thematic Innovation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Main Thematic Innovation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Main Thematic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Changebridge Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Changebridge Capital Sustainable are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Changebridge Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Main Thematic and Changebridge Capital

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

The idea behind Main Thematic Innovation and Changebridge Capital Sustainable 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.