Correlation Between James Balanced and Embark Small
Can any of the company-specific risk be diversified away by investing in both James Balanced and Embark Small 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 James Balanced and Embark Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Balanced Golden and Embark Small Cap, you can compare the effects of market volatilities on James Balanced and Embark Small 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 James Balanced with a short position of Embark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and Embark Small.
Diversification Opportunities for James Balanced and Embark Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between James and Embark is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Embark Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Small Cap and James Balanced 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 James Balanced Golden are associated (or correlated) with Embark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Small Cap has no effect on the direction of James Balanced i.e., James Balanced and Embark Small go up and down completely randomly.
Pair Corralation between James Balanced and Embark Small
Assuming the 90 days horizon James Balanced is expected to generate 1.4 times less return on investment than Embark Small. But when comparing it to its historical volatility, James Balanced Golden is 2.63 times less risky than Embark Small. It trades about 0.14 of its potential returns per unit of risk. Embark Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,048 in Embark Small Cap on September 3, 2024 and sell it today you would earn a total of 131.00 from holding Embark Small Cap or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Balanced Golden vs. Embark Small Cap
Performance |
| Timeline |
| James Balanced Golden |
| Embark Small Cap |
James Balanced and Embark Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Balanced and Embark Small
The main advantage of trading using opposite James Balanced and Embark Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Balanced position performs unexpectedly, Embark Small 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 Embark Small will offset losses from the drop in Embark Small's long position.| James Balanced vs. Vanguard Lifestrategy Moderate | James Balanced vs. Vanguard Lifestrategy Income | James Balanced vs. Vanguard Lifestrategy Growth | James Balanced vs. Vanguard Explorer Fund |
| Embark Small vs. Siit Ultra Short | Embark Small vs. Rbc Short Duration | Embark Small vs. Sterling Capital Short | Embark Small vs. Quantitative Longshort Equity |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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