Correlation Between Escalade Incorporated and Character
Can any of the company-specific risk be diversified away by investing in both Escalade Incorporated and Character 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 Escalade Incorporated and Character into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escalade Incorporated and The Character Group, you can compare the effects of market volatilities on Escalade Incorporated and Character 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 Escalade Incorporated with a short position of Character. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escalade Incorporated and Character.
Diversification Opportunities for Escalade Incorporated and Character
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Escalade and Character is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and The Character Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Character Group and Escalade Incorporated 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 Escalade Incorporated are associated (or correlated) with Character. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Character Group has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and Character go up and down completely randomly.
Pair Corralation between Escalade Incorporated and Character
Given the investment horizon of 90 days Escalade Incorporated is expected to generate 42.67 times more return on investment than Character. However, Escalade Incorporated is 42.67 times more volatile than The Character Group. It trades about 0.24 of its potential returns per unit of risk. The Character Group is currently generating about 0.22 per unit of risk. If you would invest 1,307 in Escalade Incorporated on September 2, 2024 and sell it today you would earn a total of 193.00 from holding Escalade Incorporated or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escalade Incorporated vs. The Character Group
Performance |
| Timeline |
| Escalade Incorporated |
| Character Group |
Escalade Incorporated and Character Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escalade Incorporated and Character
The main advantage of trading using opposite Escalade Incorporated and Character positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated position performs unexpectedly, Character 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 Character will offset losses from the drop in Character's long position.| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group |
| Character vs. American Outdoor Brands | Character vs. Clarus Corp | Character vs. Escalade Incorporated | Character vs. Johnson Outdoors |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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