Correlation Between Whole Earth and Eos Energy
Can any of the company-specific risk be diversified away by investing in both Whole Earth and Eos Energy 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 Whole Earth and Eos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whole Earth Brands and Eos Energy Enterprises, you can compare the effects of market volatilities on Whole Earth and Eos Energy 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 Whole Earth with a short position of Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whole Earth and Eos Energy.
Diversification Opportunities for Whole Earth and Eos Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Whole and Eos is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Whole Earth Brands and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises and Whole Earth 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 Whole Earth Brands are associated (or correlated) with Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of Whole Earth i.e., Whole Earth and Eos Energy go up and down completely randomly.
Pair Corralation between Whole Earth and Eos Energy
Assuming the 90 days horizon Whole Earth Brands is expected to generate 5.96 times more return on investment than Eos Energy. However, Whole Earth is 5.96 times more volatile than Eos Energy Enterprises. It trades about 0.07 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about 0.06 per unit of risk. If you would invest 27.00 in Whole Earth Brands on August 24, 2024 and sell it today you would lose (27.00) from holding Whole Earth Brands or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.15% |
| Values | Daily Returns |
Whole Earth Brands vs. Eos Energy Enterprises
Performance |
| Timeline |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Eos Energy Enterprises |
Whole Earth and Eos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whole Earth and Eos Energy
The main advantage of trading using opposite Whole Earth and Eos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whole Earth position performs unexpectedly, Eos Energy 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 Eos Energy will offset losses from the drop in Eos Energy's long position.The idea behind Whole Earth Brands and Eos Energy Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eos Energy vs. Eos Energy Enterprises | Eos Energy vs. CuriosityStream | Eos Energy vs. GCM Grosvenor | Eos Energy vs. Canoo Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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