Correlation Between Digimarc and East West
Can any of the company-specific risk be diversified away by investing in both Digimarc and East West 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 Digimarc and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and East West Petroleum, you can compare the effects of market volatilities on Digimarc and East West 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 Digimarc with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and East West.
Diversification Opportunities for Digimarc and East West
Very good diversification
The 3 months correlation between Digimarc and East is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and East West Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Petroleum and Digimarc 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 Digimarc are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Petroleum has no effect on the direction of Digimarc i.e., Digimarc and East West go up and down completely randomly.
Pair Corralation between Digimarc and East West
Given the investment horizon of 90 days Digimarc is expected to generate 49.26 times less return on investment than East West. But when comparing it to its historical volatility, Digimarc is 13.78 times less risky than East West. It trades about 0.06 of its potential returns per unit of risk. East West Petroleum is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6.00 in East West Petroleum on September 28, 2024 and sell it today you would lose (3.00) from holding East West Petroleum or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Digimarc vs. East West Petroleum
Performance |
| Timeline |
| Digimarc |
| East West Petroleum |
Digimarc and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and East West
The main advantage of trading using opposite Digimarc and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Digimarc vs. Accenture plc | Digimarc vs. Concentrix | Digimarc vs. Cognizant Technology Solutions | Digimarc vs. CDW Corp |
| East West vs. Valeura Energy | East West vs. Invictus Energy Limited | East West vs. ConnectOne Bancorp | East West vs. RCM Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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