Correlation Between ECD Automotive and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both ECD Automotive and Emerson Radio 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 ECD Automotive and Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECD Automotive Design and Emerson Radio, you can compare the effects of market volatilities on ECD Automotive and Emerson Radio 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 ECD Automotive with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECD Automotive and Emerson Radio.
Diversification Opportunities for ECD Automotive and Emerson Radio
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ECD and Emerson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ECD Automotive Design and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and ECD Automotive 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 ECD Automotive Design are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of ECD Automotive i.e., ECD Automotive and Emerson Radio go up and down completely randomly.
Pair Corralation between ECD Automotive and Emerson Radio
Given the investment horizon of 90 days ECD Automotive Design is expected to under-perform the Emerson Radio. But the stock apears to be less risky and, when comparing its historical volatility, ECD Automotive Design is 2.19 times less risky than Emerson Radio. The stock trades about -0.3 of its potential returns per unit of risk. The Emerson Radio is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Emerson Radio on November 1, 2024 and sell it today you would earn a total of 7.20 from holding Emerson Radio or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECD Automotive Design vs. Emerson Radio
Performance |
| Timeline |
| ECD Automotive Design |
| Emerson Radio |
ECD Automotive and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECD Automotive and Emerson Radio
The main advantage of trading using opposite ECD Automotive and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECD Automotive position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| ECD Automotive vs. Emerson Radio | ECD Automotive vs. The Cheesecake Factory | ECD Automotive vs. Marine Products | ECD Automotive vs. Sonos Inc |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |