Correlation Between Eastwood Bio and Empire Company
Can any of the company-specific risk be diversified away by investing in both Eastwood Bio and Empire Company 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 Eastwood Bio and Empire Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastwood Bio Medical Canada and Empire Company Limited, you can compare the effects of market volatilities on Eastwood Bio and Empire Company 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 Eastwood Bio with a short position of Empire Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Empire Company.
Diversification Opportunities for Eastwood Bio and Empire Company
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastwood and Empire is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Empire Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Limited and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Empire Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Limited has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Empire Company go up and down completely randomly.
Pair Corralation between Eastwood Bio and Empire Company
Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to generate 16.17 times more return on investment than Empire Company. However, Eastwood Bio is 16.17 times more volatile than Empire Company Limited. It trades about 0.01 of its potential returns per unit of risk. Empire Company Limited is currently generating about -0.17 per unit of risk. If you would invest 56.00 in Eastwood Bio Medical Canada on November 3, 2024 and sell it today you would lose (7.00) from holding Eastwood Bio Medical Canada or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastwood Bio Medical Canada vs. Empire Company Limited
Performance |
| Timeline |
| Eastwood Bio Medical |
| Empire Limited |
Eastwood Bio and Empire Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastwood Bio and Empire Company
The main advantage of trading using opposite Eastwood Bio and Empire Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio position performs unexpectedly, Empire Company 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 Empire Company will offset losses from the drop in Empire Company's long position.| Eastwood Bio vs. Covalon Technologies | Eastwood Bio vs. Sirona Biochem Corp | Eastwood Bio vs. Medicure | Eastwood Bio vs. Arch Biopartners |
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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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