Correlation Between Credit Corp and EQ Resources
Can any of the company-specific risk be diversified away by investing in both Credit Corp and EQ Resources 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 Credit Corp and EQ Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Corp Group and EQ Resources, you can compare the effects of market volatilities on Credit Corp and EQ Resources 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 Credit Corp with a short position of EQ Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Corp and EQ Resources.
Diversification Opportunities for Credit Corp and EQ Resources
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Credit and EQR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Credit Corp Group and EQ Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQ Resources and Credit Corp 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 Credit Corp Group are associated (or correlated) with EQ Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQ Resources has no effect on the direction of Credit Corp i.e., Credit Corp and EQ Resources go up and down completely randomly.
Pair Corralation between Credit Corp and EQ Resources
Assuming the 90 days trading horizon Credit Corp is expected to generate 3.9 times less return on investment than EQ Resources. But when comparing it to its historical volatility, Credit Corp Group is 2.93 times less risky than EQ Resources. It trades about 0.1 of its potential returns per unit of risk. EQ Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4.90 in EQ Resources on September 2, 2024 and sell it today you would earn a total of 0.60 from holding EQ Resources or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Corp Group vs. EQ Resources
Performance |
| Timeline |
| Credit Corp Group |
| EQ Resources |
Credit Corp and EQ Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Corp and EQ Resources
The main advantage of trading using opposite Credit Corp and EQ Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Corp position performs unexpectedly, EQ Resources 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 EQ Resources will offset losses from the drop in EQ Resources' long position.| Credit Corp vs. Kip McGrath Education | Credit Corp vs. Australian Unity Office | Credit Corp vs. Super Retail Group | Credit Corp vs. Home Consortium |
| EQ Resources vs. Sky Metals | EQ Resources vs. Leeuwin Metals | EQ Resources vs. Black Rock Mining | EQ Resources vs. DY6 Metals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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