Correlation Between Applied Finance and Easterly Snow
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Easterly Snow 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 Applied Finance and Easterly Snow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Easterly Snow Longshort, you can compare the effects of market volatilities on Applied Finance and Easterly Snow 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 Applied Finance with a short position of Easterly Snow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Easterly Snow.
Diversification Opportunities for Applied Finance and Easterly Snow
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Easterly is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Easterly Snow Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easterly Snow Longshort and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Easterly Snow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easterly Snow Longshort has no effect on the direction of Applied Finance i.e., Applied Finance and Easterly Snow go up and down completely randomly.
Pair Corralation between Applied Finance and Easterly Snow
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.45 times more return on investment than Easterly Snow. However, Applied Finance is 1.45 times more volatile than Easterly Snow Longshort. It trades about 0.04 of its potential returns per unit of risk. Easterly Snow Longshort is currently generating about 0.03 per unit of risk. If you would invest 1,856 in Applied Finance Explorer on October 25, 2024 and sell it today you would earn a total of 431.00 from holding Applied Finance Explorer or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Easterly Snow Longshort
Performance |
| Timeline |
| Applied Finance Explorer |
| Easterly Snow Longshort |
Applied Finance and Easterly Snow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Easterly Snow
The main advantage of trading using opposite Applied Finance and Easterly Snow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Easterly Snow 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 Snow will offset losses from the drop in Easterly Snow's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Easterly Snow vs. Jpmorgan Hedged Equity | Easterly Snow vs. Jpmorgan Hedged Equity | Easterly Snow vs. Jpmorgan Hedged Equity | Easterly Snow vs. Gateway Fund Class |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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