Correlation Between Esker SA and Direct Equity
Can any of the company-specific risk be diversified away by investing in both Esker SA and Direct Equity 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 Esker SA and Direct Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esker SA and Direct Equity International, you can compare the effects of market volatilities on Esker SA and Direct Equity 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 Esker SA with a short position of Direct Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esker SA and Direct Equity.
Diversification Opportunities for Esker SA and Direct Equity
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Esker and Direct is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Direct Equity International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Equity Intern and Esker SA 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 Esker SA are associated (or correlated) with Direct Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Equity Intern has no effect on the direction of Esker SA i.e., Esker SA and Direct Equity go up and down completely randomly.
Pair Corralation between Esker SA and Direct Equity
Assuming the 90 days horizon Esker SA is expected to generate 1.19 times less return on investment than Direct Equity. But when comparing it to its historical volatility, Esker SA is 7.13 times less risky than Direct Equity. It trades about 0.1 of its potential returns per unit of risk. Direct Equity International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.86 in Direct Equity International on August 31, 2024 and sell it today you would lose (0.85) from holding Direct Equity International or give up 98.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esker SA vs. Direct Equity International
Performance |
| Timeline |
| Esker SA |
| Direct Equity Intern |
Esker SA and Direct Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esker SA and Direct Equity
The main advantage of trading using opposite Esker SA and Direct Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esker SA position performs unexpectedly, Direct Equity 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 Direct Equity will offset losses from the drop in Direct Equity's long position.| Esker SA vs. Waldencast Acquisition Corp | Esker SA vs. Alkami Technology | Esker SA vs. ADEIA P | Esker SA vs. Paycor HCM |
| Direct Equity vs. Daniels Corporate Advisory | Direct Equity vs. AimRite Holdings Corp | Direct Equity vs. Sack Lunch Productions | Direct Equity vs. Dalrada Financial Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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