Correlation Between EJF Investments and Pan American
Can any of the company-specific risk be diversified away by investing in both EJF Investments and Pan American 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 Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Pan American Silver, you can compare the effects of market volatilities on EJF Investments and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Pan American.
Diversification Opportunities for EJF Investments and Pan American
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between EJF and Pan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of EJF Investments i.e., EJF Investments and Pan American go up and down completely randomly.
Pair Corralation between EJF Investments and Pan American
Assuming the 90 days trading horizon EJF Investments is expected to generate 0.55 times more return on investment than Pan American. However, EJF Investments is 1.83 times less risky than Pan American. It trades about 0.28 of its potential returns per unit of risk. Pan American Silver is currently generating about -0.09 per unit of risk. If you would invest 11,900 in EJF Investments on October 20, 2024 and sell it today you would earn a total of 750.00 from holding EJF Investments or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
EJF Investments vs. Pan American Silver
Performance |
| Timeline |
| EJF Investments |
| Pan American Silver |
EJF Investments and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Pan American
The main advantage of trading using opposite EJF Investments and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| EJF Investments vs. Southwest Airlines Co | EJF Investments vs. Chrysalis Investments | EJF Investments vs. Various Eateries PLC | EJF Investments vs. Tavistock Investments Plc |
| Pan American vs. Ecclesiastical Insurance Office | Pan American vs. Tata Steel Limited | Pan American vs. Fortune Brands Home | Pan American vs. Waste Management |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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