Correlation Between Ecofibre and SportsHero
Can any of the company-specific risk be diversified away by investing in both Ecofibre and SportsHero 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 Ecofibre and SportsHero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and SportsHero, you can compare the effects of market volatilities on Ecofibre and SportsHero 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 Ecofibre with a short position of SportsHero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and SportsHero.
Diversification Opportunities for Ecofibre and SportsHero
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecofibre and SportsHero is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and SportsHero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SportsHero and Ecofibre 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 Ecofibre are associated (or correlated) with SportsHero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SportsHero has no effect on the direction of Ecofibre i.e., Ecofibre and SportsHero go up and down completely randomly.
Pair Corralation between Ecofibre and SportsHero
Assuming the 90 days trading horizon Ecofibre is expected to under-perform the SportsHero. But the stock apears to be less risky and, when comparing its historical volatility, Ecofibre is 1.42 times less risky than SportsHero. The stock trades about -0.19 of its potential returns per unit of risk. The SportsHero is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1.40 in SportsHero on August 29, 2024 and sell it today you would earn a total of 0.40 from holding SportsHero or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ecofibre vs. SportsHero
Performance |
| Timeline |
| Ecofibre |
| SportsHero |
Ecofibre and SportsHero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and SportsHero
The main advantage of trading using opposite Ecofibre and SportsHero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre position performs unexpectedly, SportsHero 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 SportsHero will offset losses from the drop in SportsHero's long position.| Ecofibre vs. Austco Healthcare | Ecofibre vs. Hotel Property Investments | Ecofibre vs. Apiam Animal Health | Ecofibre vs. Carlton Investments |
| SportsHero vs. PVW Resources | SportsHero vs. Woolworths | SportsHero vs. Wesfarmers | SportsHero vs. Coles 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stocks Directory Find actively traded stocks across global markets |