Correlation Between E Media and Rex Trueform
Can any of the company-specific risk be diversified away by investing in both E Media and Rex Trueform 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 Media and Rex Trueform into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Media Holdings and Rex Trueform Group, you can compare the effects of market volatilities on E Media and Rex Trueform 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 Media with a short position of Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Rex Trueform.
Diversification Opportunities for E Media and Rex Trueform
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMH and Rex is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group and E Media 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 Media Holdings are associated (or correlated) with Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of E Media i.e., E Media and Rex Trueform go up and down completely randomly.
Pair Corralation between E Media and Rex Trueform
Assuming the 90 days trading horizon E Media Holdings is expected to generate 3.69 times more return on investment than Rex Trueform. However, E Media is 3.69 times more volatile than Rex Trueform Group. It trades about 0.01 of its potential returns per unit of risk. Rex Trueform Group is currently generating about -0.1 per unit of risk. If you would invest 35,000 in E Media Holdings on September 2, 2024 and sell it today you would lose (600.00) from holding E Media Holdings or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Media Holdings vs. Rex Trueform Group
Performance |
| Timeline |
| E Media Holdings |
| Rex Trueform Group |
E Media and Rex Trueform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Rex Trueform
The main advantage of trading using opposite E Media and Rex Trueform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Rex Trueform 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 Rex Trueform will offset losses from the drop in Rex Trueform's long position.| E Media vs. Brimstone Investment | E Media vs. Astoria Investments | E Media vs. HomeChoice Investments | E Media vs. British American Tobacco |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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