Correlation Between Essex Environmental and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Essex Environmental and Pear Tree 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 Essex Environmental and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essex Environmental Opportunities and Pear Tree Polaris, you can compare the effects of market volatilities on Essex Environmental and Pear Tree 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 Essex Environmental with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essex Environmental and Pear Tree.
Diversification Opportunities for Essex Environmental and Pear Tree
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essex and Pear is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Essex Environmental Opportunit and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Essex Environmental 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 Essex Environmental Opportunities are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Essex Environmental i.e., Essex Environmental and Pear Tree go up and down completely randomly.
Pair Corralation between Essex Environmental and Pear Tree
Assuming the 90 days horizon Essex Environmental Opportunities is expected to generate 1.75 times more return on investment than Pear Tree. However, Essex Environmental is 1.75 times more volatile than Pear Tree Polaris. It trades about 0.06 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.05 per unit of risk. If you would invest 1,215 in Essex Environmental Opportunities on September 2, 2024 and sell it today you would earn a total of 243.00 from holding Essex Environmental Opportunities or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essex Environmental Opportunit vs. Pear Tree Polaris
Performance |
| Timeline |
| Essex Environmental |
| Pear Tree Polaris |
Essex Environmental and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essex Environmental and Pear Tree
The main advantage of trading using opposite Essex Environmental and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essex Environmental position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Essex Environmental vs. Pear Tree Quality | Essex Environmental vs. Pear Tree Polaris | Essex Environmental vs. Pear Tree Polaris | Essex Environmental vs. Essex Environmental Opportunities |
| Pear Tree vs. Loomis Sayles Growth | Pear Tree vs. Edgewood Growth Fund | Pear Tree vs. Nuance Mid Cap | Pear Tree vs. Parnassus Mid Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |