Correlation Between Eq Energy and Flow Beverage
Can any of the company-specific risk be diversified away by investing in both Eq Energy and Flow Beverage 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 Eq Energy and Flow Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eq Energy Drink and Flow Beverage Corp, you can compare the effects of market volatilities on Eq Energy and Flow Beverage 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 Eq Energy with a short position of Flow Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eq Energy and Flow Beverage.
Diversification Opportunities for Eq Energy and Flow Beverage
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EQLB and Flow is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and Flow Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Beverage Corp and Eq Energy 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 Eq Energy Drink are associated (or correlated) with Flow Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Beverage Corp has no effect on the direction of Eq Energy i.e., Eq Energy and Flow Beverage go up and down completely randomly.
Pair Corralation between Eq Energy and Flow Beverage
Given the investment horizon of 90 days Eq Energy Drink is expected to generate 2.19 times more return on investment than Flow Beverage. However, Eq Energy is 2.19 times more volatile than Flow Beverage Corp. It trades about 0.05 of its potential returns per unit of risk. Flow Beverage Corp is currently generating about -0.03 per unit of risk. If you would invest 0.15 in Eq Energy Drink on August 24, 2024 and sell it today you would lose (0.01) from holding Eq Energy Drink or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eq Energy Drink vs. Flow Beverage Corp
Performance |
| Timeline |
| Eq Energy Drink |
| Flow Beverage Corp |
Eq Energy and Flow Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eq Energy and Flow Beverage
The main advantage of trading using opposite Eq Energy and Flow Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy position performs unexpectedly, Flow Beverage 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 Flow Beverage will offset losses from the drop in Flow Beverage's long position.| Eq Energy vs. Fbec Worldwide | Eq Energy vs. National Beverage Corp | Eq Energy vs. Vita Coco | Eq Energy vs. Hill Street Beverage |
| Flow Beverage vs. Fbec Worldwide | Flow Beverage vs. National Beverage Corp | Flow Beverage vs. Vita Coco | Flow Beverage vs. Hill Street Beverage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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