Correlation Between Eastern Michigan and Woodlands Financial
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan and Woodlands Financial 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 Eastern Michigan and Woodlands Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Michigan Financial and Woodlands Financial Services, you can compare the effects of market volatilities on Eastern Michigan and Woodlands Financial 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 Eastern Michigan with a short position of Woodlands Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and Woodlands Financial.
Diversification Opportunities for Eastern Michigan and Woodlands Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Woodlands is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and Woodlands Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodlands Financial and Eastern Michigan 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 Eastern Michigan Financial are associated (or correlated) with Woodlands Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodlands Financial has no effect on the direction of Eastern Michigan i.e., Eastern Michigan and Woodlands Financial go up and down completely randomly.
Pair Corralation between Eastern Michigan and Woodlands Financial
Given the investment horizon of 90 days Eastern Michigan Financial is expected to generate 1.01 times more return on investment than Woodlands Financial. However, Eastern Michigan is 1.01 times more volatile than Woodlands Financial Services. It trades about 0.05 of its potential returns per unit of risk. Woodlands Financial Services is currently generating about 0.01 per unit of risk. If you would invest 2,284 in Eastern Michigan Financial on August 26, 2024 and sell it today you would earn a total of 1,257 from holding Eastern Michigan Financial or generate 55.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.7% |
| Values | Daily Returns |
Eastern Michigan Financial vs. Woodlands Financial Services
Performance |
| Timeline |
| Eastern Michigan Fin |
| Woodlands Financial |
Eastern Michigan and Woodlands Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and Woodlands Financial
The main advantage of trading using opposite Eastern Michigan and Woodlands Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan position performs unexpectedly, Woodlands Financial 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 Woodlands Financial will offset losses from the drop in Woodlands Financial's long position.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| Woodlands Financial vs. Eastern Michigan Financial | Woodlands Financial vs. Commercial National Financial | Woodlands Financial vs. Mifflinburg Bancorp | Woodlands Financial vs. Apollo Bancorp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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