Correlation Between EQ Resources and Credit Corp
Can any of the company-specific risk be diversified away by investing in both EQ Resources and Credit 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 EQ Resources and Credit Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQ Resources and Credit Corp Group, you can compare the effects of market volatilities on EQ Resources and Credit 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 EQ Resources with a short position of Credit Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Resources and Credit Corp.
Diversification Opportunities for EQ Resources and Credit Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EQR and Credit is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding EQ Resources and Credit Corp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Corp Group and EQ Resources 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 Resources are associated (or correlated) with Credit Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Corp Group has no effect on the direction of EQ Resources i.e., EQ Resources and Credit Corp go up and down completely randomly.
Pair Corralation between EQ Resources and Credit Corp
Assuming the 90 days trading horizon EQ Resources is expected to generate 3.89 times more return on investment than Credit Corp. However, EQ Resources is 3.89 times more volatile than Credit Corp Group. It trades about 0.19 of its potential returns per unit of risk. Credit Corp Group is currently generating about -0.12 per unit of risk. If you would invest 3.10 in EQ Resources on November 28, 2024 and sell it today you would earn a total of 1.30 from holding EQ Resources or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EQ Resources vs. Credit Corp Group
Performance |
| Timeline |
| EQ Resources |
| Credit Corp Group |
EQ Resources and Credit Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Resources and Credit Corp
The main advantage of trading using opposite EQ Resources and Credit Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Resources position performs unexpectedly, Credit 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 Credit Corp will offset losses from the drop in Credit Corp's long position.| EQ Resources vs. Sky Metals | EQ Resources vs. Falcon Metals | EQ Resources vs. FireFly Metals | EQ Resources vs. TPG Telecom |
| Credit Corp vs. Westpac Banking | Credit Corp vs. TPG Telecom | Credit Corp vs. Computershare | Credit Corp vs. Treasury Wine Estates |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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