Correlation Between Eat Beyond and M3
Can any of the company-specific risk be diversified away by investing in both Eat Beyond and M3 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 Eat Beyond and M3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eat Beyond Global and M3 Inc, you can compare the effects of market volatilities on Eat Beyond and M3 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 Eat Beyond with a short position of M3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eat Beyond and M3.
Diversification Opportunities for Eat Beyond and M3
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eat and M3 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eat Beyond Global and M3 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Inc and Eat Beyond 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 Eat Beyond Global are associated (or correlated) with M3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Inc has no effect on the direction of Eat Beyond i.e., Eat Beyond and M3 go up and down completely randomly.
Pair Corralation between Eat Beyond and M3
Assuming the 90 days horizon Eat Beyond Global is expected to generate 1143.45 times more return on investment than M3. However, Eat Beyond is 1143.45 times more volatile than M3 Inc. It trades about 0.21 of its potential returns per unit of risk. M3 Inc is currently generating about -0.22 per unit of risk. If you would invest 3.20 in Eat Beyond Global on September 1, 2024 and sell it today you would earn a total of 3.40 from holding Eat Beyond Global or generate 106.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eat Beyond Global vs. M3 Inc
Performance |
| Timeline |
| Eat Beyond Global |
| M3 Inc |
Eat Beyond and M3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eat Beyond and M3
The main advantage of trading using opposite Eat Beyond and M3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eat Beyond position performs unexpectedly, M3 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 M3 will offset losses from the drop in M3's long position.| Eat Beyond vs. Elysee Development Corp | Eat Beyond vs. Azimut Holding SpA | Eat Beyond vs. Ameritrans Capital Corp | Eat Beyond vs. Aimia Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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