Correlation Between ESH Acquisition and HE Equipment
Can any of the company-specific risk be diversified away by investing in both ESH Acquisition and HE Equipment 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 ESH Acquisition and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESH Acquisition Corp and HE Equipment Services, you can compare the effects of market volatilities on ESH Acquisition and HE Equipment 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 ESH Acquisition with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and HE Equipment.
Diversification Opportunities for ESH Acquisition and HE Equipment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ESH and HEES is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and ESH Acquisition 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 ESH Acquisition Corp are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of ESH Acquisition i.e., ESH Acquisition and HE Equipment go up and down completely randomly.
Pair Corralation between ESH Acquisition and HE Equipment
Given the investment horizon of 90 days ESH Acquisition Corp is expected to generate 0.17 times more return on investment than HE Equipment. However, ESH Acquisition Corp is 5.82 times less risky than HE Equipment. It trades about 0.16 of its potential returns per unit of risk. HE Equipment Services is currently generating about -0.11 per unit of risk. If you would invest 1,068 in ESH Acquisition Corp on September 14, 2024 and sell it today you would earn a total of 12.00 from holding ESH Acquisition Corp or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESH Acquisition Corp vs. HE Equipment Services
Performance |
| Timeline |
| ESH Acquisition Corp |
| HE Equipment Services |
ESH Acquisition and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESH Acquisition and HE Equipment
The main advantage of trading using opposite ESH Acquisition and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| ESH Acquisition vs. Burlington Stores | ESH Acquisition vs. Acumen Pharmaceuticals | ESH Acquisition vs. Centessa Pharmaceuticals PLC | ESH Acquisition vs. JJill Inc |
| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Custom Truck One | HE Equipment vs. Herc Holdings | HE Equipment vs. Alta Equipment Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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