Correlation Between ESE Entertainment and Greenlane Renewables
Can any of the company-specific risk be diversified away by investing in both ESE Entertainment and Greenlane Renewables 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 Greenlane Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESE Entertainment and Greenlane Renewables, you can compare the effects of market volatilities on ESE Entertainment and Greenlane Renewables 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 Greenlane Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESE Entertainment and Greenlane Renewables.
Diversification Opportunities for ESE Entertainment and Greenlane Renewables
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESE and Greenlane is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables 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 Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Greenlane Renewables go up and down completely randomly.
Pair Corralation between ESE Entertainment and Greenlane Renewables
Assuming the 90 days horizon ESE Entertainment is expected to under-perform the Greenlane Renewables. But the stock apears to be less risky and, when comparing its historical volatility, ESE Entertainment is 2.02 times less risky than Greenlane Renewables. The stock trades about -0.19 of its potential returns per unit of risk. The Greenlane Renewables is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6.50 in Greenlane Renewables on August 31, 2024 and sell it today you would earn a total of 3.50 from holding Greenlane Renewables or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESE Entertainment vs. Greenlane Renewables
Performance |
| Timeline |
| ESE Entertainment |
| Greenlane Renewables |
ESE Entertainment and Greenlane Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESE Entertainment and Greenlane Renewables
The main advantage of trading using opposite ESE Entertainment and Greenlane Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESE Entertainment position performs unexpectedly, Greenlane Renewables 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 Greenlane Renewables will offset losses from the drop in Greenlane Renewables' long position.| ESE Entertainment vs. Cielo Waste Solutions | ESE Entertainment vs. Eros Resources Corp | ESE Entertainment vs. Forstrong Global Income | ESE Entertainment vs. iShares Canadian HYBrid |
| Greenlane Renewables vs. Baylin Technologies | Greenlane Renewables vs. Supremex | Greenlane Renewables vs. iShares Canadian HYBrid | Greenlane Renewables vs. Brompton European Dividend |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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