Correlation Between Escalade Incorporated and Clarus Corp
Can any of the company-specific risk be diversified away by investing in both Escalade Incorporated and Clarus 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 Escalade Incorporated and Clarus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escalade Incorporated and Clarus Corp, you can compare the effects of market volatilities on Escalade Incorporated and Clarus 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 Escalade Incorporated with a short position of Clarus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escalade Incorporated and Clarus Corp.
Diversification Opportunities for Escalade Incorporated and Clarus Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Escalade and Clarus is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and Clarus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarus Corp 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 Clarus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarus Corp has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and Clarus Corp go up and down completely randomly.
Pair Corralation between Escalade Incorporated and Clarus Corp
Given the investment horizon of 90 days Escalade Incorporated is expected to generate 1.28 times more return on investment than Clarus Corp. However, Escalade Incorporated is 1.28 times more volatile than Clarus Corp. It trades about 0.07 of its potential returns per unit of risk. Clarus Corp is currently generating about 0.01 per unit of risk. If you would invest 1,348 in Escalade Incorporated on August 24, 2024 and sell it today you would earn a total of 167.00 from holding Escalade Incorporated or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escalade Incorporated vs. Clarus Corp
Performance |
| Timeline |
| Escalade Incorporated |
| Clarus Corp |
Escalade Incorporated and Clarus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escalade Incorporated and Clarus Corp
The main advantage of trading using opposite Escalade Incorporated and Clarus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated position performs unexpectedly, Clarus 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 Clarus Corp will offset losses from the drop in Clarus Corp's long position.| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Eastern Co |
| Clarus Corp vs. Vista Outdoor | Clarus Corp vs. Johnson Outdoors | Clarus Corp vs. Escalade Incorporated | Clarus Corp vs. JAKKS Pacific |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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