Correlation Between EJF Investments and Technicolor
Can any of the company-specific risk be diversified away by investing in both EJF Investments and Technicolor 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 EJF Investments and Technicolor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Technicolor, you can compare the effects of market volatilities on EJF Investments and Technicolor 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 EJF Investments with a short position of Technicolor. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Technicolor.
Diversification Opportunities for EJF Investments and Technicolor
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EJF and Technicolor is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor and EJF Investments 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 EJF Investments are associated (or correlated) with Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of EJF Investments i.e., EJF Investments and Technicolor go up and down completely randomly.
Pair Corralation between EJF Investments and Technicolor
Assuming the 90 days trading horizon EJF Investments is expected to generate 1.33 times less return on investment than Technicolor. But when comparing it to its historical volatility, EJF Investments is 2.5 times less risky than Technicolor. It trades about 0.26 of its potential returns per unit of risk. Technicolor is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Technicolor on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Technicolor or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EJF Investments vs. Technicolor
Performance |
| Timeline |
| EJF Investments |
| Technicolor |
EJF Investments and Technicolor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Technicolor
The main advantage of trading using opposite EJF Investments and Technicolor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments position performs unexpectedly, Technicolor 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 Technicolor will offset losses from the drop in Technicolor's long position.| EJF Investments vs. Fevertree Drinks Plc | EJF Investments vs. Ecclesiastical Insurance Office | EJF Investments vs. GreenX Metals | EJF Investments vs. Associated British Foods |
| Technicolor vs. Tatton Asset Management | Technicolor vs. Auction Technology Group | Technicolor vs. EJF Investments | Technicolor vs. Herald Investment Trust |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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