Correlation Between East Side and MedMira
Can any of the company-specific risk be diversified away by investing in both East Side and MedMira 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 East Side and MedMira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Side Games and MedMira, you can compare the effects of market volatilities on East Side and MedMira 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 East Side with a short position of MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and MedMira.
Diversification Opportunities for East Side and MedMira
Modest diversification
The 3 months correlation between East and MedMira is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira and East Side 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 East Side Games are associated (or correlated) with MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of East Side i.e., East Side and MedMira go up and down completely randomly.
Pair Corralation between East Side and MedMira
Assuming the 90 days trading horizon East Side Games is expected to under-perform the MedMira. But the stock apears to be less risky and, when comparing its historical volatility, East Side Games is 1.24 times less risky than MedMira. The stock trades about -0.13 of its potential returns per unit of risk. The MedMira is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8.00 in MedMira on September 1, 2024 and sell it today you would earn a total of 0.50 from holding MedMira or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Side Games vs. MedMira
Performance |
| Timeline |
| East Side Games |
| MedMira |
East Side and MedMira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Side and MedMira
The main advantage of trading using opposite East Side and MedMira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side position performs unexpectedly, MedMira 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 MedMira will offset losses from the drop in MedMira's long position.| East Side vs. JPMorgan Chase Co | East Side vs. Bank of America | East Side vs. Royal Bank of | East Side vs. Royal Bank of |
| MedMira vs. Datable Technology Corp | MedMira vs. Brookfield Office Properties | MedMira vs. Leons Furniture Limited | MedMira vs. Algonquin Power Utilities |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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