Correlation Between Energy and Eestech
Can any of the company-specific risk be diversified away by investing in both Energy and Eestech 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 Energy and Eestech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy and Water and Eestech, you can compare the effects of market volatilities on Energy and Eestech 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 Energy with a short position of Eestech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy and Eestech.
Diversification Opportunities for Energy and Eestech
Very poor diversification
The 3 months correlation between Energy and Eestech is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and Eestech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eestech and Energy 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 Energy and Water are associated (or correlated) with Eestech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eestech has no effect on the direction of Energy i.e., Energy and Eestech go up and down completely randomly.
Pair Corralation between Energy and Eestech
If you would invest 0.04 in Eestech on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Eestech or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy and Water vs. Eestech
Performance |
| Timeline |
| Energy and Water |
| Eestech |
Energy and Eestech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy and Eestech
The main advantage of trading using opposite Energy and Eestech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy position performs unexpectedly, Eestech 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 Eestech will offset losses from the drop in Eestech's long position.| Energy vs. TOMI Environmental Solutions | Energy vs. Zurn Elkay Water | Energy vs. Federal Signal | Energy vs. Energy Recovery |
| Eestech vs. Element Solutions | Eestech vs. Orion Engineered Carbons | Eestech vs. Minerals Technologies | Eestech vs. Ingevity Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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