Correlation Between Eve Holding and Rolls-Royce Holdings
Can any of the company-specific risk be diversified away by investing in both Eve Holding and Rolls-Royce Holdings 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 Eve Holding and Rolls-Royce Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Rolls Royce Holdings plc, you can compare the effects of market volatilities on Eve Holding and Rolls-Royce Holdings 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 Eve Holding with a short position of Rolls-Royce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Rolls-Royce Holdings.
Diversification Opportunities for Eve Holding and Rolls-Royce Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eve and Rolls-Royce is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings and Eve Holding 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 Eve Holding are associated (or correlated) with Rolls-Royce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Eve Holding i.e., Eve Holding and Rolls-Royce Holdings go up and down completely randomly.
Pair Corralation between Eve Holding and Rolls-Royce Holdings
Given the investment horizon of 90 days Eve Holding is expected to generate 1.35 times more return on investment than Rolls-Royce Holdings. However, Eve Holding is 1.35 times more volatile than Rolls Royce Holdings plc. It trades about 0.17 of its potential returns per unit of risk. Rolls Royce Holdings plc is currently generating about -0.04 per unit of risk. If you would invest 339.00 in Eve Holding on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Eve Holding or generate 21.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. Rolls Royce Holdings plc
Performance |
| Timeline |
| Eve Holding |
| Rolls Royce Holdings |
Eve Holding and Rolls-Royce Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Rolls-Royce Holdings
The main advantage of trading using opposite Eve Holding and Rolls-Royce Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding position performs unexpectedly, Rolls-Royce Holdings 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 Rolls-Royce Holdings will offset losses from the drop in Rolls-Royce Holdings' long position.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| Rolls-Royce Holdings vs. Airbus Group NV | Rolls-Royce Holdings vs. Park Electrochemical | Rolls-Royce Holdings vs. Rolls Royce Holdings PLC | Rolls-Royce Holdings vs. Triumph 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |