Correlation Between E Home and Despegar Corp
Can any of the company-specific risk be diversified away by investing in both E Home and Despegar Corp 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 E Home and Despegar Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Home Household Service and Despegar Corp, you can compare the effects of market volatilities on E Home and Despegar Corp 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 E Home with a short position of Despegar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Despegar Corp.
Diversification Opportunities for E Home and Despegar Corp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EJH and Despegar is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Despegar Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Despegar Corp and E Home 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 E Home Household Service are associated (or correlated) with Despegar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Despegar Corp has no effect on the direction of E Home i.e., E Home and Despegar Corp go up and down completely randomly.
Pair Corralation between E Home and Despegar Corp
Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Despegar Corp. In addition to that, E Home is 1.88 times more volatile than Despegar Corp. It trades about -0.1 of its total potential returns per unit of risk. Despegar Corp is currently generating about 0.3 per unit of volatility. If you would invest 1,482 in Despegar Corp on August 27, 2024 and sell it today you would earn a total of 393.00 from holding Despegar Corp or generate 26.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Home Household Service vs. Despegar Corp
Performance |
| Timeline |
| E Home Household |
| Despegar Corp |
E Home and Despegar Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Home and Despegar Corp
The main advantage of trading using opposite E Home and Despegar Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home position performs unexpectedly, Despegar Corp 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 Despegar Corp will offset losses from the drop in Despegar Corp's long position.| E Home vs. Smart Share Global | E Home vs. WW International | E Home vs. Frontdoor | E Home vs. Carriage Services |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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