Correlation Between Microequities Asset and EP Financial
Can any of the company-specific risk be diversified away by investing in both Microequities Asset and EP Financial 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 Microequities Asset and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microequities Asset Management and EP Financial Group, you can compare the effects of market volatilities on Microequities Asset and EP Financial 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 Microequities Asset with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microequities Asset and EP Financial.
Diversification Opportunities for Microequities Asset and EP Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microequities and EP1 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microequities Asset Management and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Microequities Asset 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 Microequities Asset Management are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Microequities Asset i.e., Microequities Asset and EP Financial go up and down completely randomly.
Pair Corralation between Microequities Asset and EP Financial
Assuming the 90 days trading horizon Microequities Asset is expected to generate 4.19 times less return on investment than EP Financial. But when comparing it to its historical volatility, Microequities Asset Management is 1.92 times less risky than EP Financial. It trades about 0.1 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 48.00 in EP Financial Group on September 13, 2024 and sell it today you would earn a total of 4.00 from holding EP Financial Group or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microequities Asset Management vs. EP Financial Group
Performance |
| Timeline |
| Microequities Asset |
| EP Financial Group |
Microequities Asset and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microequities Asset and EP Financial
The main advantage of trading using opposite Microequities Asset and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microequities Asset position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| Microequities Asset vs. Australian United Investment | Microequities Asset vs. Clime Investment Management | Microequities Asset vs. REGAL ASIAN INVESTMENTS | Microequities Asset vs. Regal Investment |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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