Correlation Between Associated Capital and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both Associated Capital and ESH Acquisition 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 Associated Capital and ESH Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and ESH Acquisition Corp, you can compare the effects of market volatilities on Associated Capital and ESH Acquisition 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 Associated Capital with a short position of ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and ESH Acquisition.
Diversification Opportunities for Associated Capital and ESH Acquisition
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Associated and ESH is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp and Associated Capital 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 Associated Capital Group are associated (or correlated) with ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of Associated Capital i.e., Associated Capital and ESH Acquisition go up and down completely randomly.
Pair Corralation between Associated Capital and ESH Acquisition
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 14.8 times more return on investment than ESH Acquisition. However, Associated Capital is 14.8 times more volatile than ESH Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.1 per unit of risk. If you would invest 3,579 in Associated Capital Group on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Associated Capital Group or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. ESH Acquisition Corp
Performance |
| Timeline |
| Associated Capital |
| ESH Acquisition Corp |
Associated Capital and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and ESH Acquisition
The main advantage of trading using opposite Associated Capital and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, ESH Acquisition 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 ESH Acquisition will offset losses from the drop in ESH Acquisition's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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