Correlation Between Autosports and Embark Education
Can any of the company-specific risk be diversified away by investing in both Autosports and Embark Education 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 Autosports and Embark Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Embark Education Group, you can compare the effects of market volatilities on Autosports and Embark Education 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 Autosports with a short position of Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Embark Education.
Diversification Opportunities for Autosports and Embark Education
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Autosports and Embark is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education and Autosports 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 Autosports Group are associated (or correlated) with Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Autosports i.e., Autosports and Embark Education go up and down completely randomly.
Pair Corralation between Autosports and Embark Education
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Embark Education. In addition to that, Autosports is 1.08 times more volatile than Embark Education Group. It trades about -0.04 of its total potential returns per unit of risk. Embark Education Group is currently generating about 0.1 per unit of volatility. If you would invest 64.00 in Embark Education Group on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Embark Education Group or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Embark Education Group
Performance |
| Timeline |
| Autosports Group |
| Embark Education |
Autosports and Embark Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Embark Education
The main advantage of trading using opposite Autosports and Embark Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Embark Education 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 Embark Education will offset losses from the drop in Embark Education's long position.| Autosports vs. Summit Resources Limited | Autosports vs. Champion Iron | Autosports vs. Ridley | Autosports vs. Peel Mining |
| Embark Education vs. Summit Resources Limited | Embark Education vs. Champion Iron | Embark Education vs. Ridley | Embark Education vs. Peel Mining |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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