Correlation Between ED Invest and HM Inwest
Can any of the company-specific risk be diversified away by investing in both ED Invest and HM Inwest 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 ED Invest and HM Inwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ED Invest SA and HM Inwest SA, you can compare the effects of market volatilities on ED Invest and HM Inwest 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 ED Invest with a short position of HM Inwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of ED Invest and HM Inwest.
Diversification Opportunities for ED Invest and HM Inwest
Very good diversification
The 3 months correlation between EDI and HMI is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ED Invest SA and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest SA and ED Invest 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 ED Invest SA are associated (or correlated) with HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of ED Invest i.e., ED Invest and HM Inwest go up and down completely randomly.
Pair Corralation between ED Invest and HM Inwest
Assuming the 90 days trading horizon ED Invest SA is expected to generate 12.51 times more return on investment than HM Inwest. However, ED Invest is 12.51 times more volatile than HM Inwest SA. It trades about 0.2 of its potential returns per unit of risk. HM Inwest SA is currently generating about 0.04 per unit of risk. If you would invest 560.00 in ED Invest SA on September 4, 2024 and sell it today you would earn a total of 88.00 from holding ED Invest SA or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ED Invest SA vs. HM Inwest SA
Performance |
| Timeline |
| ED Invest SA |
| HM Inwest SA |
ED Invest and HM Inwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ED Invest and HM Inwest
The main advantage of trading using opposite ED Invest and HM Inwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ED Invest position performs unexpectedly, HM Inwest 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 HM Inwest will offset losses from the drop in HM Inwest's long position.| ED Invest vs. Monnari Trade SA | ED Invest vs. New Tech Venture | ED Invest vs. Skyline Investment SA | ED Invest vs. Tower Investments SA |
| HM Inwest vs. Banco Santander SA | HM Inwest vs. UniCredit SpA | HM Inwest vs. CEZ as | HM Inwest vs. Polski Koncern Naftowy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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