Correlation Between EP Financial and Microequities Asset
Can any of the company-specific risk be diversified away by investing in both EP Financial and Microequities Asset 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 Microequities Asset 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 Microequities Asset Management, you can compare the effects of market volatilities on EP Financial and Microequities Asset 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 Microequities Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Microequities Asset.
Diversification Opportunities for EP Financial and Microequities Asset
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between EP1 and Microequities is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Microequities Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microequities Asset 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 Microequities Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microequities Asset has no effect on the direction of EP Financial i.e., EP Financial and Microequities Asset go up and down completely randomly.
Pair Corralation between EP Financial and Microequities Asset
Assuming the 90 days trading horizon EP Financial Group is expected to generate 1.92 times more return on investment than Microequities Asset. However, EP Financial is 1.92 times more volatile than Microequities Asset Management. It trades about 0.21 of its potential returns per unit of risk. Microequities Asset Management is currently generating about 0.1 per unit of risk. If you would invest 48.00 in EP Financial Group on September 13, 2024 and sell it today you would earn a total of 4.00 from holding EP Financial Group or generate 8.33% 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. Microequities Asset Management
Performance |
| Timeline |
| EP Financial Group |
| Microequities Asset |
EP Financial and Microequities Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Microequities Asset
The main advantage of trading using opposite EP Financial and Microequities Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Microequities Asset 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 Microequities Asset will offset losses from the drop in Microequities Asset's long position.| EP Financial vs. Bio Gene Technology | EP Financial vs. Cleanaway Waste Management | EP Financial vs. Platinum Asset Management | EP Financial vs. K2 Asset Management |
| Microequities Asset vs. Australian United Investment | Microequities Asset vs. Clime Investment Management | Microequities Asset vs. REGAL ASIAN INVESTMENTS | Microequities Asset vs. Regal Investment |
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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