Correlation Between EEI Corp and GT Capital
Can any of the company-specific risk be diversified away by investing in both EEI Corp and GT Capital 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 EEI Corp and GT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EEI Corp and GT Capital Holdings, you can compare the effects of market volatilities on EEI Corp and GT Capital 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 EEI Corp with a short position of GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of EEI Corp and GT Capital.
Diversification Opportunities for EEI Corp and GT Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EEI and GTCAP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding EEI Corp and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings and EEI Corp 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 EEI Corp are associated (or correlated) with GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of EEI Corp i.e., EEI Corp and GT Capital go up and down completely randomly.
Pair Corralation between EEI Corp and GT Capital
Assuming the 90 days trading horizon EEI Corp is expected to generate 1.83 times more return on investment than GT Capital. However, EEI Corp is 1.83 times more volatile than GT Capital Holdings. It trades about 0.06 of its potential returns per unit of risk. GT Capital Holdings is currently generating about -0.11 per unit of risk. If you would invest 325.00 in EEI Corp on October 7, 2024 and sell it today you would earn a total of 10.00 from holding EEI Corp or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EEI Corp vs. GT Capital Holdings
Performance |
| Timeline |
| EEI Corp |
| GT Capital Holdings |
EEI Corp and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EEI Corp and GT Capital
The main advantage of trading using opposite EEI Corp and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EEI Corp position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital's long position.| EEI Corp vs. Asia United Bank | EEI Corp vs. National Reinsurance | EEI Corp vs. Metropolitan Bank Trust | EEI Corp vs. Converge Information Communications |
| GT Capital vs. GT Capital Holdings | GT Capital vs. Allhome Corp | GT Capital vs. Jollibee Foods Corp | GT Capital vs. Altus Property Ventures |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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