Correlation Between EJF Investments and Flow Traders
Can any of the company-specific risk be diversified away by investing in both EJF Investments and Flow Traders 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 Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Flow Traders NV, you can compare the effects of market volatilities on EJF Investments and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Flow Traders.
Diversification Opportunities for EJF Investments and Flow Traders
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EJF and Flow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of EJF Investments i.e., EJF Investments and Flow Traders go up and down completely randomly.
Pair Corralation between EJF Investments and Flow Traders
Assuming the 90 days trading horizon EJF Investments is expected to generate 2.02 times less return on investment than Flow Traders. But when comparing it to its historical volatility, EJF Investments is 1.5 times less risky than Flow Traders. It trades about 0.2 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,110 in Flow Traders NV on October 11, 2024 and sell it today you would earn a total of 203.00 from holding Flow Traders NV or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EJF Investments vs. Flow Traders NV
Performance |
| Timeline |
| EJF Investments |
| Flow Traders NV |
EJF Investments and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Flow Traders
The main advantage of trading using opposite EJF Investments and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' 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 |
| Flow Traders vs. UNIQA Insurance Group | Flow Traders vs. Ecclesiastical Insurance Office | Flow Traders vs. Centaur Media | Flow Traders vs. Vienna Insurance Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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