Correlation Between Herald Investment and Emergent Biosolutions
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Emergent Biosolutions 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 Herald Investment and Emergent Biosolutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Emergent Biosolutions, you can compare the effects of market volatilities on Herald Investment and Emergent Biosolutions 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 Herald Investment with a short position of Emergent Biosolutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Emergent Biosolutions.
Diversification Opportunities for Herald Investment and Emergent Biosolutions
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Herald and Emergent is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of Herald Investment i.e., Herald Investment and Emergent Biosolutions go up and down completely randomly.
Pair Corralation between Herald Investment and Emergent Biosolutions
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.15 times more return on investment than Emergent Biosolutions. However, Herald Investment Trust is 6.54 times less risky than Emergent Biosolutions. It trades about 0.36 of its potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.03 per unit of risk. If you would invest 210,500 in Herald Investment Trust on September 13, 2024 and sell it today you would earn a total of 33,500 from holding Herald Investment Trust or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Emergent Biosolutions
Performance |
| Timeline |
| Herald Investment Trust |
| Emergent Biosolutions |
Herald Investment and Emergent Biosolutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Emergent Biosolutions
The main advantage of trading using opposite Herald Investment and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Emergent Biosolutions 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 Emergent Biosolutions will offset losses from the drop in Emergent Biosolutions' long position.| Herald Investment vs. Vienna Insurance Group | Herald Investment vs. LPKF Laser Electronics | Herald Investment vs. Odyssean Investment Trust | Herald Investment vs. Electronic Arts |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |