Correlation Between EP Financial and Aurizon Holdings
Can any of the company-specific risk be diversified away by investing in both EP Financial and Aurizon Holdings 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 Aurizon Holdings 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 Aurizon Holdings, you can compare the effects of market volatilities on EP Financial and Aurizon Holdings 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 Aurizon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Aurizon Holdings.
Diversification Opportunities for EP Financial and Aurizon Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EP1 and Aurizon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Aurizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurizon Holdings 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 Aurizon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurizon Holdings has no effect on the direction of EP Financial i.e., EP Financial and Aurizon Holdings go up and down completely randomly.
Pair Corralation between EP Financial and Aurizon Holdings
Assuming the 90 days trading horizon EP Financial Group is expected to generate 2.94 times more return on investment than Aurizon Holdings. However, EP Financial is 2.94 times more volatile than Aurizon Holdings. It trades about 0.08 of its potential returns per unit of risk. Aurizon Holdings is currently generating about -0.04 per unit of risk. If you would invest 50.00 in EP Financial Group on September 3, 2024 and sell it today you would earn a total of 2.00 from holding EP Financial Group or generate 4.0% 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. Aurizon Holdings
Performance |
| Timeline |
| EP Financial Group |
| Aurizon Holdings |
EP Financial and Aurizon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Aurizon Holdings
The main advantage of trading using opposite EP Financial and Aurizon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Aurizon Holdings 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 Aurizon Holdings will offset losses from the drop in Aurizon Holdings' long position.| EP Financial vs. Audio Pixels Holdings | EP Financial vs. Iodm | EP Financial vs. Nsx | EP Financial vs. TTG Fintech |
| Aurizon Holdings vs. Perseus Mining | Aurizon Holdings vs. Collins Foods | Aurizon Holdings vs. G8 Education | Aurizon Holdings vs. Charter Hall Education |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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