Correlation Between EP Financial and Harvey Norman
Can any of the company-specific risk be diversified away by investing in both EP Financial and Harvey Norman 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 Harvey Norman 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 Harvey Norman Holdings, you can compare the effects of market volatilities on EP Financial and Harvey Norman 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 Harvey Norman. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Harvey Norman.
Diversification Opportunities for EP Financial and Harvey Norman
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between EP1 and Harvey is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Harvey Norman Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvey Norman 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 Harvey Norman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvey Norman Holdings has no effect on the direction of EP Financial i.e., EP Financial and Harvey Norman go up and down completely randomly.
Pair Corralation between EP Financial and Harvey Norman
Assuming the 90 days trading horizon EP Financial Group is expected to generate 2.16 times more return on investment than Harvey Norman. However, EP Financial is 2.16 times more volatile than Harvey Norman Holdings. It trades about 0.02 of its potential returns per unit of risk. Harvey Norman Holdings is currently generating about 0.04 per unit of risk. If you would invest 50.00 in EP Financial Group on September 1, 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 | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
EP Financial Group vs. Harvey Norman Holdings
Performance |
| Timeline |
| EP Financial Group |
| Harvey Norman Holdings |
EP Financial and Harvey Norman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Harvey Norman
The main advantage of trading using opposite EP Financial and Harvey Norman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Harvey Norman 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 Harvey Norman will offset losses from the drop in Harvey Norman's long position.| EP Financial vs. Navigator Global Investments | EP Financial vs. Collins Foods | EP Financial vs. Hotel Property Investments | EP Financial vs. Queste Communications |
| Harvey Norman vs. EP Financial Group | Harvey Norman vs. Flagship Investments | Harvey Norman vs. MA Financial Group | Harvey Norman vs. Finexia 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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