Correlation Between EP Financial and Eagle Mountain
Can any of the company-specific risk be diversified away by investing in both EP Financial and Eagle Mountain 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 Eagle Mountain 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 Eagle Mountain Mining, you can compare the effects of market volatilities on EP Financial and Eagle Mountain 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 Eagle Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Eagle Mountain.
Diversification Opportunities for EP Financial and Eagle Mountain
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between EP1 and Eagle is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Eagle Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mountain Mining 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 Eagle Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mountain Mining has no effect on the direction of EP Financial i.e., EP Financial and Eagle Mountain go up and down completely randomly.
Pair Corralation between EP Financial and Eagle Mountain
Assuming the 90 days trading horizon EP Financial Group is expected to generate 0.63 times more return on investment than Eagle Mountain. However, EP Financial Group is 1.58 times less risky than Eagle Mountain. It trades about 0.02 of its potential returns per unit of risk. Eagle Mountain Mining is currently generating about -0.03 per unit of risk. If you would invest 52.00 in EP Financial Group on August 27, 2024 and sell it today you would earn a total of 0.00 from holding EP Financial Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EP Financial Group vs. Eagle Mountain Mining
Performance |
| Timeline |
| EP Financial Group |
| Eagle Mountain Mining |
EP Financial and Eagle Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Eagle Mountain
The main advantage of trading using opposite EP Financial and Eagle Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Eagle Mountain 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 Eagle Mountain will offset losses from the drop in Eagle Mountain's long position.| EP Financial vs. Perseus Mining | EP Financial vs. My Foodie Box | EP Financial vs. Spirit Telecom | EP Financial vs. Eagle Mountain Mining |
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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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