Correlation Between EFU General and Big Bird
Can any of the company-specific risk be diversified away by investing in both EFU General and Big Bird 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 EFU General and Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFU General Insurance and Big Bird Foods, you can compare the effects of market volatilities on EFU General and Big Bird 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 EFU General with a short position of Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Big Bird.
Diversification Opportunities for EFU General and Big Bird
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EFU and Big is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods and EFU General 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 EFU General Insurance are associated (or correlated) with Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of EFU General i.e., EFU General and Big Bird go up and down completely randomly.
Pair Corralation between EFU General and Big Bird
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 0.72 times more return on investment than Big Bird. However, EFU General Insurance is 1.39 times less risky than Big Bird. It trades about 0.09 of its potential returns per unit of risk. Big Bird Foods is currently generating about 0.02 per unit of risk. If you would invest 8,243 in EFU General Insurance on October 13, 2024 and sell it today you would earn a total of 3,014 from holding EFU General Insurance or generate 36.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.86% |
| Values | Daily Returns |
EFU General Insurance vs. Big Bird Foods
Performance |
| Timeline |
| EFU General Insurance |
| Big Bird Foods |
EFU General and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Big Bird
The main advantage of trading using opposite EFU General and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| EFU General vs. Beco Steel | EFU General vs. Unity Foods | EFU General vs. Aisha Steel Mills | EFU General vs. Fateh Sports Wear |
| Big Bird vs. Synthetic Products Enterprises | Big Bird vs. EFU General Insurance | Big Bird vs. Nimir Industrial Chemical | Big Bird vs. Universal Insurance |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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