Correlation Between Eva Airways and Sigurd Microelectronics
Can any of the company-specific risk be diversified away by investing in both Eva Airways and Sigurd Microelectronics 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 Eva Airways and Sigurd Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eva Airways Corp and Sigurd Microelectronics Corp, you can compare the effects of market volatilities on Eva Airways and Sigurd Microelectronics 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 Eva Airways with a short position of Sigurd Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eva Airways and Sigurd Microelectronics.
Diversification Opportunities for Eva Airways and Sigurd Microelectronics
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eva and Sigurd is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eva Airways Corp and Sigurd Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigurd Microelectronics and Eva Airways 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 Eva Airways Corp are associated (or correlated) with Sigurd Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigurd Microelectronics has no effect on the direction of Eva Airways i.e., Eva Airways and Sigurd Microelectronics go up and down completely randomly.
Pair Corralation between Eva Airways and Sigurd Microelectronics
Assuming the 90 days trading horizon Eva Airways is expected to generate 1.2 times less return on investment than Sigurd Microelectronics. But when comparing it to its historical volatility, Eva Airways Corp is 1.02 times less risky than Sigurd Microelectronics. It trades about 0.13 of its potential returns per unit of risk. Sigurd Microelectronics Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,810 in Sigurd Microelectronics Corp on November 2, 2024 and sell it today you would earn a total of 240.00 from holding Sigurd Microelectronics Corp or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eva Airways Corp vs. Sigurd Microelectronics Corp
Performance |
| Timeline |
| Eva Airways Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Sigurd Microelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eva Airways and Sigurd Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eva Airways and Sigurd Microelectronics
The main advantage of trading using opposite Eva Airways and Sigurd Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eva Airways position performs unexpectedly, Sigurd Microelectronics 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 Sigurd Microelectronics will offset losses from the drop in Sigurd Microelectronics' long position.The idea behind Eva Airways Corp and Sigurd Microelectronics Corp 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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