Correlation Between Evercore Partners and Capital Southwest
Can any of the company-specific risk be diversified away by investing in both Evercore Partners and Capital Southwest 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 Evercore Partners and Capital Southwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evercore Partners and Capital Southwest, you can compare the effects of market volatilities on Evercore Partners and Capital Southwest 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 Evercore Partners with a short position of Capital Southwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evercore Partners and Capital Southwest.
Diversification Opportunities for Evercore Partners and Capital Southwest
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evercore and Capital is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evercore Partners and Capital Southwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Southwest and Evercore Partners 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 Evercore Partners are associated (or correlated) with Capital Southwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Southwest has no effect on the direction of Evercore Partners i.e., Evercore Partners and Capital Southwest go up and down completely randomly.
Pair Corralation between Evercore Partners and Capital Southwest
Considering the 90-day investment horizon Evercore Partners is expected to generate 4.26 times more return on investment than Capital Southwest. However, Evercore Partners is 4.26 times more volatile than Capital Southwest. It trades about 0.11 of its potential returns per unit of risk. Capital Southwest is currently generating about 0.07 per unit of risk. If you would invest 12,931 in Evercore Partners on August 27, 2024 and sell it today you would earn a total of 18,204 from holding Evercore Partners or generate 140.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.22% |
| Values | Daily Returns |
Evercore Partners vs. Capital Southwest
Performance |
| Timeline |
| Evercore Partners |
| Capital Southwest |
Evercore Partners and Capital Southwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evercore Partners and Capital Southwest
The main advantage of trading using opposite Evercore Partners and Capital Southwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evercore Partners position performs unexpectedly, Capital Southwest 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 Capital Southwest will offset losses from the drop in Capital Southwest's long position.| Evercore Partners vs. PJT Partners | Evercore Partners vs. Moelis Co | Evercore Partners vs. Perella Weinberg Partners | Evercore Partners vs. Jefferies Financial Group |
| Capital Southwest vs. Marine Products | Capital Southwest vs. Helmerich and Payne | Capital Southwest vs. Sonos Inc | Capital Southwest vs. National Beverage Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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