Correlation Between Superior Plus and Easterly Government
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Easterly Government 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 Superior Plus and Easterly Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Easterly Government Properties, you can compare the effects of market volatilities on Superior Plus and Easterly Government 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 Superior Plus with a short position of Easterly Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Easterly Government.
Diversification Opportunities for Superior Plus and Easterly Government
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Superior and Easterly is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Easterly Government Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easterly Government and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Easterly Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easterly Government has no effect on the direction of Superior Plus i.e., Superior Plus and Easterly Government go up and down completely randomly.
Pair Corralation between Superior Plus and Easterly Government
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Easterly Government. In addition to that, Superior Plus is 1.42 times more volatile than Easterly Government Properties. It trades about -0.03 of its total potential returns per unit of risk. Easterly Government Properties is currently generating about 0.01 per unit of volatility. If you would invest 1,066 in Easterly Government Properties on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Easterly Government Properties or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Easterly Government Properties
Performance |
| Timeline |
| Superior Plus Corp |
| Easterly Government |
Superior Plus and Easterly Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Easterly Government
The main advantage of trading using opposite Superior Plus and Easterly Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Easterly Government 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 Easterly Government will offset losses from the drop in Easterly Government's long position.| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
| Easterly Government vs. Office Properties Income | Easterly Government vs. CITY OFFICE REIT | Easterly Government vs. CREMECOMTRSBI DL 001 | Easterly Government vs. Superior Plus Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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