Correlation Between ESE Entertainment and European Residential
Can any of the company-specific risk be diversified away by investing in both ESE Entertainment and European Residential 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 ESE Entertainment and European Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESE Entertainment and European Residential Real, you can compare the effects of market volatilities on ESE Entertainment and European Residential 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 ESE Entertainment with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESE Entertainment and European Residential.
Diversification Opportunities for ESE Entertainment and European Residential
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESE and European is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and ESE Entertainment 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 ESE Entertainment are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and European Residential go up and down completely randomly.
Pair Corralation between ESE Entertainment and European Residential
Assuming the 90 days horizon ESE Entertainment is expected to under-perform the European Residential. In addition to that, ESE Entertainment is 1.8 times more volatile than European Residential Real. It trades about -0.19 of its total potential returns per unit of risk. European Residential Real is currently generating about 0.29 per unit of volatility. If you would invest 306.00 in European Residential Real on September 1, 2024 and sell it today you would earn a total of 74.00 from holding European Residential Real or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESE Entertainment vs. European Residential Real
Performance |
| Timeline |
| ESE Entertainment |
| European Residential Real |
ESE Entertainment and European Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESE Entertainment and European Residential
The main advantage of trading using opposite ESE Entertainment and European Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESE Entertainment position performs unexpectedly, European Residential 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 European Residential will offset losses from the drop in European Residential's long position.| ESE Entertainment vs. Thunderbird Entertainment Group | ESE Entertainment vs. VerticalScope Holdings | ESE Entertainment vs. WildBrain | ESE Entertainment vs. iShares Canadian HYBrid |
| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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