Correlation Between E Home and Frontdoor
Can any of the company-specific risk be diversified away by investing in both E Home and Frontdoor 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 Frontdoor 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 Frontdoor, you can compare the effects of market volatilities on E Home and Frontdoor 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 Frontdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Frontdoor.
Diversification Opportunities for E Home and Frontdoor
Excellent diversification
The 3 months correlation between EJH and Frontdoor is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Frontdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontdoor 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 Frontdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontdoor has no effect on the direction of E Home i.e., E Home and Frontdoor go up and down completely randomly.
Pair Corralation between E Home and Frontdoor
Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Frontdoor. In addition to that, E Home is 3.08 times more volatile than Frontdoor. It trades about -0.03 of its total potential returns per unit of risk. Frontdoor is currently generating about 0.35 per unit of volatility. If you would invest 4,951 in Frontdoor on August 28, 2024 and sell it today you would earn a total of 1,003 from holding Frontdoor or generate 20.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Home Household Service vs. Frontdoor
Performance |
| Timeline |
| E Home Household |
| Frontdoor |
E Home and Frontdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Home and Frontdoor
The main advantage of trading using opposite E Home and Frontdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home position performs unexpectedly, Frontdoor 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 Frontdoor will offset losses from the drop in Frontdoor's long position.| E Home vs. Smart Share Global | E Home vs. WW International | E Home vs. Frontdoor | E Home vs. Carriage Services |
| Frontdoor vs. Bright Horizons Family | Frontdoor vs. Smart Share Global | Frontdoor vs. Mister Car Wash | Frontdoor vs. Carriage Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |