Correlation Between EVS Broadcast and Associated British
Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and Associated British 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 EVS Broadcast and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVS Broadcast Equipment and Associated British Foods, you can compare the effects of market volatilities on EVS Broadcast and Associated British 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 EVS Broadcast with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and Associated British.
Diversification Opportunities for EVS Broadcast and Associated British
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EVS and Associated is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Associated British go up and down completely randomly.
Pair Corralation between EVS Broadcast and Associated British
Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 1.14 times more return on investment than Associated British. However, EVS Broadcast is 1.14 times more volatile than Associated British Foods. It trades about -0.02 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.13 per unit of risk. If you would invest 2,890 in EVS Broadcast Equipment on August 31, 2024 and sell it today you would lose (35.00) from holding EVS Broadcast Equipment or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVS Broadcast Equipment vs. Associated British Foods
Performance |
| Timeline |
| EVS Broadcast Equipment |
| Associated British Foods |
EVS Broadcast and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVS Broadcast and Associated British
The main advantage of trading using opposite EVS Broadcast and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| EVS Broadcast vs. Neometals | EVS Broadcast vs. Coor Service Management | EVS Broadcast vs. Aeorema Communications Plc | EVS Broadcast vs. JLEN Environmental Assets |
| Associated British vs. Aeorema Communications Plc | Associated British vs. British American Tobacco | Associated British vs. Induction Healthcare Group | Associated British vs. Optima Health plc |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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