Correlation Between Embark Education and Nine Entertainment
Can any of the company-specific risk be diversified away by investing in both Embark Education and Nine Entertainment 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 Nine Entertainment 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 Nine Entertainment Co, you can compare the effects of market volatilities on Embark Education and Nine Entertainment 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 Nine Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Nine Entertainment.
Diversification Opportunities for Embark Education and Nine Entertainment
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Embark and Nine is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Nine Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Entertainment 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 Nine Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Entertainment has no effect on the direction of Embark Education i.e., Embark Education and Nine Entertainment go up and down completely randomly.
Pair Corralation between Embark Education and Nine Entertainment
Assuming the 90 days trading horizon Embark Education Group is expected to under-perform the Nine Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Embark Education Group is 1.99 times less risky than Nine Entertainment. The stock trades about -0.07 of its potential returns per unit of risk. The Nine Entertainment Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 125.00 in Nine Entertainment Co on October 29, 2024 and sell it today you would earn a total of 10.00 from holding Nine Entertainment Co or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Nine Entertainment Co
Performance |
| Timeline |
| Embark Education |
| Nine Entertainment |
Embark Education and Nine Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Nine Entertainment
The main advantage of trading using opposite Embark Education and Nine Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Nine Entertainment 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 Nine Entertainment will offset losses from the drop in Nine Entertainment's long position.| Embark Education vs. Health and Plant | Embark Education vs. 29Metals | Embark Education vs. Regis Healthcare | Embark Education vs. Austco Healthcare |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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