Correlation Between Embark Education and Xero
Can any of the company-specific risk be diversified away by investing in both Embark Education and Xero 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 Xero 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 Xero, you can compare the effects of market volatilities on Embark Education and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Xero.
Diversification Opportunities for Embark Education and Xero
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embark and Xero is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of Embark Education i.e., Embark Education and Xero go up and down completely randomly.
Pair Corralation between Embark Education and Xero
Assuming the 90 days trading horizon Embark Education Group is expected to generate 1.21 times more return on investment than Xero. However, Embark Education is 1.21 times more volatile than Xero. It trades about 0.08 of its potential returns per unit of risk. Xero is currently generating about -0.16 per unit of risk. If you would invest 76.00 in Embark Education Group on December 1, 2024 and sell it today you would earn a total of 2.00 from holding Embark Education Group or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Xero
Performance |
| Timeline |
| Embark Education |
| Xero |
Embark Education and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Xero
The main advantage of trading using opposite Embark Education and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Embark Education vs. MA Financial Group | Embark Education vs. Pinnacle Investment Management | Embark Education vs. Finexia Financial Group | Embark Education vs. Platinum Asset Management |
| Xero vs. Clime Investment Management | Xero vs. MotorCycle Holdings | Xero vs. Hudson Investment Group | Xero vs. Charter Hall Retail |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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