Correlation Between European Equity and Ellsworth Convertible
Can any of the company-specific risk be diversified away by investing in both European Equity and Ellsworth Convertible 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 European Equity and Ellsworth Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and Ellsworth Convertible Growth, you can compare the effects of market volatilities on European Equity and Ellsworth Convertible 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 European Equity with a short position of Ellsworth Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and Ellsworth Convertible.
Diversification Opportunities for European Equity and Ellsworth Convertible
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Ellsworth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Ellsworth Convertible Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Convertible and European Equity 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 European Equity Closed are associated (or correlated) with Ellsworth Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Convertible has no effect on the direction of European Equity i.e., European Equity and Ellsworth Convertible go up and down completely randomly.
Pair Corralation between European Equity and Ellsworth Convertible
Considering the 90-day investment horizon European Equity Closed is expected to generate 0.69 times more return on investment than Ellsworth Convertible. However, European Equity Closed is 1.44 times less risky than Ellsworth Convertible. It trades about 0.42 of its potential returns per unit of risk. Ellsworth Convertible Growth is currently generating about 0.21 per unit of risk. If you would invest 814.00 in European Equity Closed on November 3, 2024 and sell it today you would earn a total of 56.00 from holding European Equity Closed or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Equity Closed vs. Ellsworth Convertible Growth
Performance |
| Timeline |
| European Equity Closed |
| Ellsworth Convertible |
European Equity and Ellsworth Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and Ellsworth Convertible
The main advantage of trading using opposite European Equity and Ellsworth Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, Ellsworth Convertible 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 Ellsworth Convertible will offset losses from the drop in Ellsworth Convertible's long position.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
| Ellsworth Convertible vs. Azimut Holding SpA | Ellsworth Convertible vs. Ameritrans Capital Corp | Ellsworth Convertible vs. Gdl Closed Fund | Ellsworth Convertible vs. Gabelli Global Small |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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