Correlation Between Verisk Analytics and ESGL Holdings

Can any of the company-specific risk be diversified away by investing in both Verisk Analytics and ESGL Holdings 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 Verisk Analytics and ESGL Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verisk Analytics and ESGL Holdings Limited, you can compare the effects of market volatilities on Verisk Analytics and ESGL Holdings 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 Verisk Analytics with a short position of ESGL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verisk Analytics and ESGL Holdings.

Diversification Opportunities for Verisk Analytics and ESGL Holdings

-0.63

Correlation Coefficient

Verisk Analytics  ESGL Holdings

Excellent diversification

The 3 months correlation between Verisk and ESGL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and ESGL Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGL Holdings Limited and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with ESGL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGL Holdings Limited has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and ESGL Holdings go up and down completely randomly.

Pair Corralation between Verisk Analytics and ESGL Holdings

Given the investment horizon of 90 days Verisk Analytics is expected to generate 0.12 times more return on investment than ESGL Holdings. However, Verisk Analytics is 8.09 times less risky than ESGL Holdings. It trades about -0.23 of its potential returns per unit of risk. ESGL Holdings Limited is currently generating about -0.3 per unit of risk. If you would invest  28,717  in Verisk Analytics on September 22, 2024 and sell it today you would lose (1,031) from holding Verisk Analytics or give up 3.59% of portfolio value over 90 days.

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

Verisk Analytics  vs.  ESGL Holdings Limited

Verisk Analytics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ESGL Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESGL Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with Verisk Analytics and ESGL Holdings

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

The idea behind Verisk Analytics and ESGL Holdings Limited 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.