Correlation Between EVS Broadcast and Weyerhaeuser
Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser, you can compare the effects of market volatilities on EVS Broadcast and Weyerhaeuser 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 Weyerhaeuser. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and Weyerhaeuser.
Diversification Opportunities for EVS Broadcast and Weyerhaeuser
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between EVS and Weyerhaeuser is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser 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 Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Weyerhaeuser go up and down completely randomly.
Pair Corralation between EVS Broadcast and Weyerhaeuser
Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 1.19 times more return on investment than Weyerhaeuser. However, EVS Broadcast is 1.19 times more volatile than Weyerhaeuser. It trades about 0.09 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.02 per unit of risk. If you would invest 1,942 in EVS Broadcast Equipment on December 12, 2024 and sell it today you would earn a total of 1,748 from holding EVS Broadcast Equipment or generate 90.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVS Broadcast Equipment vs. Weyerhaeuser
Performance |
| Timeline |
| EVS Broadcast Equipment |
| Weyerhaeuser |
EVS Broadcast and Weyerhaeuser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVS Broadcast and Weyerhaeuser
The main advantage of trading using opposite EVS Broadcast and Weyerhaeuser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast position performs unexpectedly, Weyerhaeuser 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 Weyerhaeuser will offset losses from the drop in Weyerhaeuser's long position.| EVS Broadcast vs. Strategic Education | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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