Correlation Between Embark Education and Prime Financial
Can any of the company-specific risk be diversified away by investing in both Embark Education and Prime Financial 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 Prime Financial 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 Prime Financial Group, you can compare the effects of market volatilities on Embark Education and Prime Financial 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 Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Prime Financial.
Diversification Opportunities for Embark Education and Prime Financial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Embark and Prime is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of Embark Education i.e., Embark Education and Prime Financial go up and down completely randomly.
Pair Corralation between Embark Education and Prime Financial
Assuming the 90 days trading horizon Embark Education Group is expected to under-perform the Prime Financial. But the stock apears to be less risky and, when comparing its historical volatility, Embark Education Group is 2.58 times less risky than Prime Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Prime Financial Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Prime Financial Group on September 19, 2024 and sell it today you would earn a total of 2.00 from holding Prime Financial Group or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Prime Financial Group
Performance |
| Timeline |
| Embark Education |
| Prime Financial Group |
Embark Education and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Prime Financial
The main advantage of trading using opposite Embark Education and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Prime Financial 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 Prime Financial will offset losses from the drop in Prime Financial's long position.| Embark Education vs. BKI Investment | Embark Education vs. Duxton Broadacre Farms | Embark Education vs. Gold Road Resources | Embark Education vs. Beston Global Food |
| Prime Financial vs. Embark Education Group | Prime Financial vs. BSP Financial Group | Prime Financial vs. Dicker Data | Prime Financial vs. Wt Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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