Correlation Between Escalade Incorporated and DR Horton
Can any of the company-specific risk be diversified away by investing in both Escalade Incorporated and DR Horton 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 DR Horton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escalade Incorporated and DR Horton, you can compare the effects of market volatilities on Escalade Incorporated and DR Horton 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 DR Horton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escalade Incorporated and DR Horton.
Diversification Opportunities for Escalade Incorporated and DR Horton
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Escalade and DHI is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and DR Horton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DR Horton 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 DR Horton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DR Horton has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and DR Horton go up and down completely randomly.
Pair Corralation between Escalade Incorporated and DR Horton
Given the investment horizon of 90 days Escalade Incorporated is expected to generate 2.49 times less return on investment than DR Horton. In addition to that, Escalade Incorporated is 1.46 times more volatile than DR Horton. It trades about 0.02 of its total potential returns per unit of risk. DR Horton is currently generating about 0.06 per unit of volatility. If you would invest 14,174 in DR Horton on August 28, 2024 and sell it today you would earn a total of 3,120 from holding DR Horton or generate 22.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escalade Incorporated vs. DR Horton
Performance |
| Timeline |
| Escalade Incorporated |
| DR Horton |
Escalade Incorporated and DR Horton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escalade Incorporated and DR Horton
The main advantage of trading using opposite Escalade Incorporated and DR Horton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated position performs unexpectedly, DR Horton 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 DR Horton will offset losses from the drop in DR Horton's long position.| Escalade Incorporated vs. MCBC Holdings | Escalade Incorporated vs. Winnebago Industries | Escalade Incorporated vs. LCI Industries | Escalade Incorporated vs. Thor Industries |
| DR Horton vs. Arhaus Inc | DR Horton vs. Floor Decor Holdings | DR Horton vs. Haverty Furniture Companies | DR Horton vs. Kingfisher plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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