Correlation Between Eros Resources and WildBrain
Can any of the company-specific risk be diversified away by investing in both Eros Resources and WildBrain 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 Eros Resources and WildBrain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eros Resources Corp and WildBrain, you can compare the effects of market volatilities on Eros Resources and WildBrain 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 Eros Resources with a short position of WildBrain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and WildBrain.
Diversification Opportunities for Eros Resources and WildBrain
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eros and WildBrain is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain and Eros 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 Eros Resources Corp are associated (or correlated) with WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of Eros Resources i.e., Eros Resources and WildBrain go up and down completely randomly.
Pair Corralation between Eros Resources and WildBrain
Assuming the 90 days horizon Eros Resources Corp is expected to generate 1.32 times more return on investment than WildBrain. However, Eros Resources is 1.32 times more volatile than WildBrain. It trades about 0.04 of its potential returns per unit of risk. WildBrain is currently generating about 0.01 per unit of risk. If you would invest 3.50 in Eros Resources Corp on September 2, 2024 and sell it today you would earn a total of 0.50 from holding Eros Resources Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Eros Resources Corp vs. WildBrain
Performance |
| Timeline |
| Eros Resources Corp |
| WildBrain |
Eros Resources and WildBrain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eros Resources and WildBrain
The main advantage of trading using opposite Eros Resources and WildBrain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros Resources position performs unexpectedly, WildBrain 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 WildBrain will offset losses from the drop in WildBrain's long position.| Eros Resources vs. Champion Iron | Eros Resources vs. Maple Leaf Foods | Eros Resources vs. Guru Organic Energy | Eros Resources vs. MTY Food Group |
| WildBrain vs. VerticalScope Holdings | WildBrain vs. iShares Canadian HYBrid | WildBrain vs. Altagas Cum Red | WildBrain vs. European Residential Real |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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