Correlation Between EP Financial and Auctus Alternative
Can any of the company-specific risk be diversified away by investing in both EP Financial and Auctus Alternative 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 EP Financial and Auctus Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EP Financial Group and Auctus Alternative Investments, you can compare the effects of market volatilities on EP Financial and Auctus Alternative 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 EP Financial with a short position of Auctus Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Auctus Alternative.
Diversification Opportunities for EP Financial and Auctus Alternative
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EP1 and Auctus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Auctus Alternative Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auctus Alternative and EP Financial 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 EP Financial Group are associated (or correlated) with Auctus Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auctus Alternative has no effect on the direction of EP Financial i.e., EP Financial and Auctus Alternative go up and down completely randomly.
Pair Corralation between EP Financial and Auctus Alternative
Assuming the 90 days trading horizon EP Financial is expected to generate 1.54 times less return on investment than Auctus Alternative. But when comparing it to its historical volatility, EP Financial Group is 1.01 times less risky than Auctus Alternative. It trades about 0.11 of its potential returns per unit of risk. Auctus Alternative Investments is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Auctus Alternative Investments on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Auctus Alternative Investments or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EP Financial Group vs. Auctus Alternative Investments
Performance |
| Timeline |
| EP Financial Group |
| Auctus Alternative |
EP Financial and Auctus Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Auctus Alternative
The main advantage of trading using opposite EP Financial and Auctus Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Auctus Alternative 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 Auctus Alternative will offset losses from the drop in Auctus Alternative's long position.| EP Financial vs. National Australia Bank | EP Financial vs. National Australia Bank | EP Financial vs. Westpac Banking | EP Financial vs. National Australia Bank |
| Auctus Alternative vs. National Australia Bank | Auctus Alternative vs. National Australia Bank | Auctus Alternative vs. Westpac Banking | Auctus Alternative vs. National Australia Bank |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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