Correlation Between EP Financial and Toys R
Can any of the company-specific risk be diversified away by investing in both EP Financial and Toys R 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 Toys R 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 Toys R Us, you can compare the effects of market volatilities on EP Financial and Toys R 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 Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Toys R.
Diversification Opportunities for EP Financial and Toys R
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EP1 and Toys is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us 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 Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of EP Financial i.e., EP Financial and Toys R go up and down completely randomly.
Pair Corralation between EP Financial and Toys R
Assuming the 90 days trading horizon EP Financial Group is expected to generate 0.36 times more return on investment than Toys R. However, EP Financial Group is 2.8 times less risky than Toys R. It trades about 0.04 of its potential returns per unit of risk. Toys R Us is currently generating about 0.01 per unit of risk. If you would invest 41.00 in EP Financial Group on September 12, 2024 and sell it today you would earn a total of 11.00 from holding EP Financial Group or generate 26.83% 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. Toys R Us
Performance |
| Timeline |
| EP Financial Group |
| Toys R Us |
EP Financial and Toys R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Toys R
The main advantage of trading using opposite EP Financial and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R'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 |
| Toys R vs. Beston Global Food | Toys R vs. Computershare | Toys R vs. RLF AgTech | Toys R vs. Macquarie Technology 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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