Correlation Between E Mini and Class III
Can any of the company-specific risk be diversified away by investing in both E Mini and Class III 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 E Mini and Class III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Mini SP 500 and Class III Milk, you can compare the effects of market volatilities on E Mini and Class III 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 E Mini with a short position of Class III. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Mini and Class III.
Diversification Opportunities for E Mini and Class III
Very good diversification
The 3 months correlation between ESUSD and Class is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding E Mini SP 500 and Class III Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Class III Milk and E Mini 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 E Mini SP 500 are associated (or correlated) with Class III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Class III Milk has no effect on the direction of E Mini i.e., E Mini and Class III go up and down completely randomly.
Pair Corralation between E Mini and Class III
Assuming the 90 days horizon E Mini SP 500 is expected to generate 1.98 times more return on investment than Class III. However, E Mini is 1.98 times more volatile than Class III Milk. It trades about 0.14 of its potential returns per unit of risk. Class III Milk is currently generating about -0.14 per unit of risk. If you would invest 586,150 in E Mini SP 500 on August 28, 2024 and sell it today you would earn a total of 14,750 from holding E Mini SP 500 or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Mini SP 500 vs. Class III Milk
Performance |
| Timeline |
| E Mini SP |
| Class III Milk |
E Mini and Class III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Mini and Class III
The main advantage of trading using opposite E Mini and Class III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Mini position performs unexpectedly, Class III 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 Class III will offset losses from the drop in Class III's long position.The idea behind E Mini SP 500 and Class III Milk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |