Correlation Between Thermal Energy and IShares SPTSX

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

By analyzing existing cross correlation between Thermal Energy International and iShares SPTSX Capped, you can compare the effects of market volatilities on Thermal Energy and IShares SPTSX 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 Thermal Energy with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and IShares SPTSX.

Diversification Opportunities for Thermal Energy and IShares SPTSX

0.49

Correlation Coefficient

Thermal Energy  IShares SPTSX

Very weak diversification

The 3 months correlation between Thermal and IShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped and Thermal Energy 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 Thermal Energy International are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of Thermal Energy i.e., Thermal Energy and IShares SPTSX go up and down completely randomly.

Pair Corralation between Thermal Energy and IShares SPTSX

Assuming the 90 days horizon Thermal Energy International is expected to under-perform the IShares SPTSX. In addition to that, Thermal Energy is 5.16 times more volatile than iShares SPTSX Capped. It trades about -0.07 of its total potential returns per unit of risk. iShares SPTSX Capped is currently generating about 0.06 per unit of volatility. If you would invest  1,670  in iShares SPTSX Capped on December 30, 2024 and sell it today you would earn a total of  70.00  from holding iShares SPTSX Capped or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Thermal Energy International  vs.  iShares SPTSX Capped

Thermal Energy Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermal Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

iShares SPTSX Capped

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thermal Energy and IShares SPTSX

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

The idea behind Thermal Energy International and iShares SPTSX Capped 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.