Correlation Between Empire Global and IHI Corp
Can any of the company-specific risk be diversified away by investing in both Empire Global and IHI Corp 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 Empire Global and IHI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Global Gaming and IHI Corp ADR, you can compare the effects of market volatilities on Empire Global and IHI Corp 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 Empire Global with a short position of IHI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Global and IHI Corp.
Diversification Opportunities for Empire Global and IHI Corp
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Empire and IHI is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Empire Global Gaming and IHI Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHI Corp ADR and Empire Global 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 Empire Global Gaming are associated (or correlated) with IHI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHI Corp ADR has no effect on the direction of Empire Global i.e., Empire Global and IHI Corp go up and down completely randomly.
Pair Corralation between Empire Global and IHI Corp
Given the investment horizon of 90 days Empire Global Gaming is expected to under-perform the IHI Corp. In addition to that, Empire Global is 3.96 times more volatile than IHI Corp ADR. It trades about -0.22 of its total potential returns per unit of risk. IHI Corp ADR is currently generating about -0.02 per unit of volatility. If you would invest 1,343 in IHI Corp ADR on September 1, 2024 and sell it today you would lose (70.00) from holding IHI Corp ADR or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire Global Gaming vs. IHI Corp ADR
Performance |
| Timeline |
| Empire Global Gaming |
| IHI Corp ADR |
Empire Global and IHI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Global and IHI Corp
The main advantage of trading using opposite Empire Global and IHI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Global position performs unexpectedly, IHI Corp 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 IHI Corp will offset losses from the drop in IHI Corp's long position.| Empire Global vs. Churchill Downs Incorporated | Empire Global vs. Gan | Empire Global vs. Rush Street Interactive | Empire Global vs. Lottery, Common Stock |
| IHI Corp vs. Sandvik AB ADR | IHI Corp vs. Schneider Electric SA | IHI Corp vs. Fanuc | IHI Corp vs. Rockwell Automation |
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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