Correlation Between Equifax and American Diversified
Can any of the company-specific risk be diversified away by investing in both Equifax and American Diversified 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 Equifax and American Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and American Diversified Holdings, you can compare the effects of market volatilities on Equifax and American Diversified 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 Equifax with a short position of American Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and American Diversified.
Diversification Opportunities for Equifax and American Diversified
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equifax and American is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and American Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Diversified and Equifax 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 Equifax are associated (or correlated) with American Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Diversified has no effect on the direction of Equifax i.e., Equifax and American Diversified go up and down completely randomly.
Pair Corralation between Equifax and American Diversified
Considering the 90-day investment horizon Equifax is expected to generate 0.16 times more return on investment than American Diversified. However, Equifax is 6.08 times less risky than American Diversified. It trades about 0.0 of its potential returns per unit of risk. American Diversified Holdings is currently generating about -0.07 per unit of risk. If you would invest 26,736 in Equifax on September 13, 2024 and sell it today you would lose (46.00) from holding Equifax or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Equifax vs. American Diversified Holdings
Performance |
| Timeline |
| Equifax |
| American Diversified |
Equifax and American Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and American Diversified
The main advantage of trading using opposite Equifax and American Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax position performs unexpectedly, American Diversified 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 American Diversified will offset losses from the drop in American Diversified's long position.| Equifax vs. Verisk Analytics | Equifax vs. Exponent | Equifax vs. FTI Consulting | Equifax vs. Franklin Covey |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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