Correlation Between Everest and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Everest and APx Acquisition 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 Everest and APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everest Group and APx Acquisition I, you can compare the effects of market volatilities on Everest and APx Acquisition 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 Everest with a short position of APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everest and APx Acquisition.
Diversification Opportunities for Everest and APx Acquisition
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Everest and APx is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I and Everest 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 Everest Group are associated (or correlated) with APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Everest i.e., Everest and APx Acquisition go up and down completely randomly.
Pair Corralation between Everest and APx Acquisition
Allowing for the 90-day total investment horizon Everest Group is expected to under-perform the APx Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Everest Group is 1.1 times less risky than APx Acquisition. The stock trades about -0.07 of its potential returns per unit of risk. The APx Acquisition I is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,186 in APx Acquisition I on September 13, 2024 and sell it today you would earn a total of 2.00 from holding APx Acquisition I or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everest Group vs. APx Acquisition I
Performance |
| Timeline |
| Everest Group |
| APx Acquisition I |
Everest and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everest and APx Acquisition
The main advantage of trading using opposite Everest and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everest position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| Everest vs. Hamilton Insurance Group, | Everest vs. Brookfield Wealth Solutions | Everest vs. Reinsurance Group of | Everest vs. Renaissancere Holdings |
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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