Correlation Between Emerald Expositions and INEO Tech
Can any of the company-specific risk be diversified away by investing in both Emerald Expositions and INEO Tech 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 Emerald Expositions and INEO Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerald Expositions Events and INEO Tech Corp, you can compare the effects of market volatilities on Emerald Expositions and INEO Tech 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 Emerald Expositions with a short position of INEO Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Expositions and INEO Tech.
Diversification Opportunities for Emerald Expositions and INEO Tech
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerald and INEO is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Expositions Events and INEO Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INEO Tech Corp and Emerald Expositions 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 Emerald Expositions Events are associated (or correlated) with INEO Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INEO Tech Corp has no effect on the direction of Emerald Expositions i.e., Emerald Expositions and INEO Tech go up and down completely randomly.
Pair Corralation between Emerald Expositions and INEO Tech
Considering the 90-day investment horizon Emerald Expositions Events is expected to generate 0.34 times more return on investment than INEO Tech. However, Emerald Expositions Events is 2.92 times less risky than INEO Tech. It trades about 0.12 of its potential returns per unit of risk. INEO Tech Corp is currently generating about -0.21 per unit of risk. If you would invest 451.00 in Emerald Expositions Events on August 24, 2024 and sell it today you would earn a total of 35.00 from holding Emerald Expositions Events or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerald Expositions Events vs. INEO Tech Corp
Performance |
| Timeline |
| Emerald Expositions |
| INEO Tech Corp |
Emerald Expositions and INEO Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerald Expositions and INEO Tech
The main advantage of trading using opposite Emerald Expositions and INEO Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Expositions position performs unexpectedly, INEO Tech 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 INEO Tech will offset losses from the drop in INEO Tech's long position.The idea behind Emerald Expositions Events and INEO Tech Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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