Correlation Between Empire Company and Rogers Sugar
Can any of the company-specific risk be diversified away by investing in both Empire Company and Rogers Sugar 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 Empire Company and Rogers Sugar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Company Limited and Rogers Sugar, you can compare the effects of market volatilities on Empire Company and Rogers Sugar 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 Empire Company with a short position of Rogers Sugar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Company and Rogers Sugar.
Diversification Opportunities for Empire Company and Rogers Sugar
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Rogers is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Empire Company Limited and Rogers Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Sugar and Empire Company 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 Empire Company Limited are associated (or correlated) with Rogers Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Sugar has no effect on the direction of Empire Company i.e., Empire Company and Rogers Sugar go up and down completely randomly.
Pair Corralation between Empire Company and Rogers Sugar
Assuming the 90 days trading horizon Empire Company Limited is expected to generate 0.82 times more return on investment than Rogers Sugar. However, Empire Company Limited is 1.22 times less risky than Rogers Sugar. It trades about 0.21 of its potential returns per unit of risk. Rogers Sugar is currently generating about 0.11 per unit of risk. If you would invest 4,128 in Empire Company Limited on September 26, 2024 and sell it today you would earn a total of 271.00 from holding Empire Company Limited or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Company Limited vs. Rogers Sugar
Performance |
| Timeline |
| Empire Limited |
| Rogers Sugar |
Empire Company and Rogers Sugar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Company and Rogers Sugar
The main advantage of trading using opposite Empire Company and Rogers Sugar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Company position performs unexpectedly, Rogers Sugar 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 Rogers Sugar will offset losses from the drop in Rogers Sugar's long position.| Empire Company vs. Transcontinental | Empire Company vs. Premium Brands Holdings | Empire Company vs. Exchange Income | Empire Company vs. ATCO |
| Rogers Sugar vs. Empire Company Limited | Rogers Sugar vs. Premium Brands Holdings | Rogers Sugar vs. Metro Inc |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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