Correlation Between Embark Education and Superior Resources
Can any of the company-specific risk be diversified away by investing in both Embark Education and Superior Resources 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 Superior Resources 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 Superior Resources, you can compare the effects of market volatilities on Embark Education and Superior Resources 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 Superior Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Superior Resources.
Diversification Opportunities for Embark Education and Superior Resources
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Embark and Superior is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Superior Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Resources 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 Superior Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Resources has no effect on the direction of Embark Education i.e., Embark Education and Superior Resources go up and down completely randomly.
Pair Corralation between Embark Education and Superior Resources
Assuming the 90 days trading horizon Embark Education is expected to generate 4.23 times less return on investment than Superior Resources. But when comparing it to its historical volatility, Embark Education Group is 3.27 times less risky than Superior Resources. It trades about 0.1 of its potential returns per unit of risk. Superior Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Superior Resources on September 3, 2024 and sell it today you would earn a total of 0.10 from holding Superior Resources or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Superior Resources
Performance |
| Timeline |
| Embark Education |
| Superior Resources |
Embark Education and Superior Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Superior Resources
The main advantage of trading using opposite Embark Education and Superior Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Superior Resources 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 Superior Resources will offset losses from the drop in Superior Resources' long position.| Embark Education vs. Westpac Banking | Embark Education vs. Champion Iron | Embark Education vs. iShares Global Healthcare | Embark Education vs. Peel Mining |
| Superior Resources vs. G8 Education | Superior Resources vs. Capitol Health | Superior Resources vs. Dexus Convenience Retail | Superior Resources vs. Embark Education 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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