Correlation Between Eos Energy and Whole Earth
Can any of the company-specific risk be diversified away by investing in both Eos Energy and Whole Earth 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 Eos Energy and Whole Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eos Energy Enterprises and Whole Earth Brands, you can compare the effects of market volatilities on Eos Energy and Whole Earth 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 Eos Energy with a short position of Whole Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and Whole Earth.
Diversification Opportunities for Eos Energy and Whole Earth
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eos and Whole is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands and Eos Energy 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 Eos Energy Enterprises are associated (or correlated) with Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of Eos Energy i.e., Eos Energy and Whole Earth go up and down completely randomly.
Pair Corralation between Eos Energy and Whole Earth
Assuming the 90 days horizon Eos Energy is expected to generate 7.56 times less return on investment than Whole Earth. But when comparing it to its historical volatility, Eos Energy Enterprises is 5.96 times less risky than Whole Earth. It trades about 0.06 of its potential returns per unit of risk. Whole Earth Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Whole Earth Brands on August 24, 2024 and sell it today you would lose (27.00) from holding Whole Earth Brands or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.15% |
| Values | Daily Returns |
Eos Energy Enterprises vs. Whole Earth Brands
Performance |
| Timeline |
| Eos Energy Enterprises |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eos Energy and Whole Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eos Energy and Whole Earth
The main advantage of trading using opposite Eos Energy and Whole Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy position performs unexpectedly, Whole Earth 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 Whole Earth will offset losses from the drop in Whole Earth's long position.| Eos Energy vs. Eos Energy Enterprises | Eos Energy vs. CuriosityStream | Eos Energy vs. GCM Grosvenor | Eos Energy vs. Canoo Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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