Correlation Between EHEALTH and Seven West
Can any of the company-specific risk be diversified away by investing in both EHEALTH and Seven West 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 EHEALTH and Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and Seven West Media, you can compare the effects of market volatilities on EHEALTH and Seven West 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 EHEALTH with a short position of Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and Seven West.
Diversification Opportunities for EHEALTH and Seven West
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EHEALTH and Seven is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media and EHEALTH 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 EHEALTH are associated (or correlated) with Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of EHEALTH i.e., EHEALTH and Seven West go up and down completely randomly.
Pair Corralation between EHEALTH and Seven West
Assuming the 90 days trading horizon EHEALTH is expected to generate 0.87 times more return on investment than Seven West. However, EHEALTH is 1.15 times less risky than Seven West. It trades about -0.01 of its potential returns per unit of risk. Seven West Media is currently generating about -0.02 per unit of risk. If you would invest 754.00 in EHEALTH on September 4, 2024 and sell it today you would lose (217.00) from holding EHEALTH or give up 28.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
EHEALTH vs. Seven West Media
Performance |
| Timeline |
| EHEALTH |
| Seven West Media |
EHEALTH and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and Seven West
The main advantage of trading using opposite EHEALTH and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.The idea behind EHEALTH and Seven West Media 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.| Seven West vs. Cogent Communications Holdings | Seven West vs. Corporate Office Properties | Seven West vs. Shenandoah Telecommunications | Seven West vs. Gamma Communications plc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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