Correlation Between Embark Education and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Embark Education and Collins Foods 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 Embark Education and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Collins Foods, you can compare the effects of market volatilities on Embark Education and Collins Foods 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 Embark Education with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Collins Foods.
Diversification Opportunities for Embark Education and Collins Foods
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embark and Collins is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Embark Education 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 Embark Education Group are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Embark Education i.e., Embark Education and Collins Foods go up and down completely randomly.
Pair Corralation between Embark Education and Collins Foods
Assuming the 90 days trading horizon Embark Education Group is expected to generate 1.23 times more return on investment than Collins Foods. However, Embark Education is 1.23 times more volatile than Collins Foods. It trades about 0.03 of its potential returns per unit of risk. Collins Foods is currently generating about -0.03 per unit of risk. If you would invest 80.00 in Embark Education Group on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Embark Education Group or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Collins Foods
Performance |
| Timeline |
| Embark Education |
| Collins Foods |
Embark Education and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Collins Foods
The main advantage of trading using opposite Embark Education and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Embark Education vs. Macquarie Technology Group | Embark Education vs. Richmond Vanadium Technology | Embark Education vs. Cleanaway Waste Management | Embark Education vs. Microequities Asset Management |
| Collins Foods vs. Summit Resources Limited | Collins Foods vs. Ecofibre | Collins Foods vs. iShares Global Healthcare | Collins Foods vs. Adriatic Metals Plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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