Correlation Between Escorts Investment and Matco Foods
Can any of the company-specific risk be diversified away by investing in both Escorts Investment and Matco Foods 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 Escorts Investment and Matco Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escorts Investment Bank and Matco Foods, you can compare the effects of market volatilities on Escorts Investment and Matco Foods 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 Escorts Investment with a short position of Matco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escorts Investment and Matco Foods.
Diversification Opportunities for Escorts Investment and Matco Foods
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Escorts and Matco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Escorts Investment Bank and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods and Escorts Investment 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 Escorts Investment Bank are associated (or correlated) with Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Escorts Investment i.e., Escorts Investment and Matco Foods go up and down completely randomly.
Pair Corralation between Escorts Investment and Matco Foods
Assuming the 90 days trading horizon Escorts Investment Bank is expected to generate 2.02 times more return on investment than Matco Foods. However, Escorts Investment is 2.02 times more volatile than Matco Foods. It trades about 0.12 of its potential returns per unit of risk. Matco Foods is currently generating about 0.01 per unit of risk. If you would invest 479.00 in Escorts Investment Bank on October 21, 2024 and sell it today you would earn a total of 76.00 from holding Escorts Investment Bank or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escorts Investment Bank vs. Matco Foods
Performance |
| Timeline |
| Escorts Investment Bank |
| Matco Foods |
Escorts Investment and Matco Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escorts Investment and Matco Foods
The main advantage of trading using opposite Escorts Investment and Matco Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escorts Investment position performs unexpectedly, Matco Foods 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 Matco Foods will offset losses from the drop in Matco Foods' long position.| Escorts Investment vs. EFU General Insurance | Escorts Investment vs. Crescent Star Insurance | Escorts Investment vs. Reliance Insurance Co | Escorts Investment vs. Sindh Modaraba Management |
| Matco Foods vs. Masood Textile Mills | Matco Foods vs. Fauji Foods | Matco Foods vs. KSB Pumps | Matco Foods vs. Mari Petroleum |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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