Correlation Between EP Financial and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both EP Financial and Mayfield Childcare 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 Mayfield Childcare 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 Mayfield Childcare, you can compare the effects of market volatilities on EP Financial and Mayfield Childcare 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 Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Mayfield Childcare.
Diversification Opportunities for EP Financial and Mayfield Childcare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EP1 and Mayfield is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare 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 Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of EP Financial i.e., EP Financial and Mayfield Childcare go up and down completely randomly.
Pair Corralation between EP Financial and Mayfield Childcare
Assuming the 90 days trading horizon EP Financial Group is expected to generate 0.93 times more return on investment than Mayfield Childcare. However, EP Financial Group is 1.08 times less risky than Mayfield Childcare. It trades about 0.21 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.13 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EP Financial Group vs. Mayfield Childcare
Performance |
| Timeline |
| EP Financial Group |
| Mayfield Childcare |
EP Financial and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Mayfield Childcare
The main advantage of trading using opposite EP Financial and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare'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 |
| Mayfield Childcare vs. Macquarie Group | Mayfield Childcare vs. Rio Tinto | Mayfield Childcare vs. CSL | Mayfield Childcare vs. Commonwealth Bank of |
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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