Correlation Between Frequency Electronics and Eaco Corp
Can any of the company-specific risk be diversified away by investing in both Frequency Electronics and Eaco Corp 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 Frequency Electronics and Eaco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and Eaco Corp, you can compare the effects of market volatilities on Frequency Electronics and Eaco Corp 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 Frequency Electronics with a short position of Eaco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and Eaco Corp.
Diversification Opportunities for Frequency Electronics and Eaco Corp
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Frequency and Eaco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and Eaco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaco Corp and Frequency Electronics 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 Frequency Electronics are associated (or correlated) with Eaco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaco Corp has no effect on the direction of Frequency Electronics i.e., Frequency Electronics and Eaco Corp go up and down completely randomly.
Pair Corralation between Frequency Electronics and Eaco Corp
If you would invest 1,262 in Frequency Electronics on September 5, 2024 and sell it today you would earn a total of 116.00 from holding Frequency Electronics or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Frequency Electronics vs. Eaco Corp
Performance |
| Timeline |
| Frequency Electronics |
| Eaco Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Frequency Electronics and Eaco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frequency Electronics and Eaco Corp
The main advantage of trading using opposite Frequency Electronics and Eaco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics position performs unexpectedly, Eaco Corp 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 Eaco Corp will offset losses from the drop in Eaco Corp's long position.| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
| Eaco Corp vs. Climb Global Solutions | Eaco Corp vs. Insight Enterprises | Eaco Corp vs. ScanSource | Eaco Corp vs. Synnex |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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