Correlation Between EP Financial and Cromwell Property
Can any of the company-specific risk be diversified away by investing in both EP Financial and Cromwell Property 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 Cromwell Property 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 Cromwell Property Group, you can compare the effects of market volatilities on EP Financial and Cromwell Property 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 Cromwell Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Cromwell Property.
Diversification Opportunities for EP Financial and Cromwell Property
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EP1 and Cromwell is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property 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 Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of EP Financial i.e., EP Financial and Cromwell Property go up and down completely randomly.
Pair Corralation between EP Financial and Cromwell Property
Assuming the 90 days trading horizon EP Financial Group is expected to generate 1.29 times more return on investment than Cromwell Property. However, EP Financial is 1.29 times more volatile than Cromwell Property Group. It trades about 0.04 of its potential returns per unit of risk. Cromwell Property Group is currently generating about -0.02 per unit of risk. If you would invest 42.00 in EP Financial Group on September 12, 2024 and sell it today you would earn a total of 10.00 from holding EP Financial Group or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EP Financial Group vs. Cromwell Property Group
Performance |
| Timeline |
| EP Financial Group |
| Cromwell Property |
EP Financial and Cromwell Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Cromwell Property
The main advantage of trading using opposite EP Financial and Cromwell Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Cromwell Property 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 Cromwell Property will offset losses from the drop in Cromwell Property's long position.| EP Financial vs. Richmond Vanadium Technology | EP Financial vs. Cleanaway Waste Management | EP Financial vs. Global Health | EP Financial vs. Oceania Healthcare |
| Cromwell Property vs. Perseus Mining | Cromwell Property vs. Finexia Financial Group | Cromwell Property vs. EVE Health Group | Cromwell Property vs. EP Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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