Correlation Between Employers Holdings and Brand Engagement
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Brand Engagement 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 Employers Holdings and Brand Engagement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Brand Engagement Network, you can compare the effects of market volatilities on Employers Holdings and Brand Engagement 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 Employers Holdings with a short position of Brand Engagement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Brand Engagement.
Diversification Opportunities for Employers Holdings and Brand Engagement
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Employers and Brand is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Brand Engagement Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Engagement Network and Employers Holdings 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 Employers Holdings are associated (or correlated) with Brand Engagement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Engagement Network has no effect on the direction of Employers Holdings i.e., Employers Holdings and Brand Engagement go up and down completely randomly.
Pair Corralation between Employers Holdings and Brand Engagement
Considering the 90-day investment horizon Employers Holdings is expected to generate 2.78 times less return on investment than Brand Engagement. But when comparing it to its historical volatility, Employers Holdings is 17.89 times less risky than Brand Engagement. It trades about 0.12 of its potential returns per unit of risk. Brand Engagement Network is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Brand Engagement Network on August 30, 2024 and sell it today you would lose (6.37) from holding Brand Engagement Network or give up 79.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.75% |
| Values | Daily Returns |
Employers Holdings vs. Brand Engagement Network
Performance |
| Timeline |
| Employers Holdings |
| Brand Engagement Network |
Employers Holdings and Brand Engagement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Brand Engagement
The main advantage of trading using opposite Employers Holdings and Brand Engagement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Brand Engagement 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 Brand Engagement will offset losses from the drop in Brand Engagement's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Brand Engagement vs. Getty Images Holdings | Brand Engagement vs. ServiceNow | Brand Engagement vs. Sandstorm Gold Ltd | Brand Engagement vs. KVH Industries |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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