Correlation Between Optical Cable and Eaco Corp
Can any of the company-specific risk be diversified away by investing in both Optical Cable and Eaco Corp 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 Optical Cable and Eaco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optical Cable and Eaco Corp, you can compare the effects of market volatilities on Optical Cable and Eaco Corp 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 Optical Cable with a short position of Eaco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optical Cable and Eaco Corp.
Diversification Opportunities for Optical Cable and Eaco Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optical and Eaco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Optical Cable and Eaco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaco Corp and Optical Cable 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 Optical Cable are associated (or correlated) with Eaco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaco Corp has no effect on the direction of Optical Cable i.e., Optical Cable and Eaco Corp go up and down completely randomly.
Pair Corralation between Optical Cable and Eaco Corp
If you would invest 473.00 in Optical Cable on November 4, 2024 and sell it today you would earn a total of 20.00 from holding Optical Cable or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Optical Cable vs. Eaco Corp
Performance |
| Timeline |
| Optical Cable |
| Eaco Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Optical Cable and Eaco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optical Cable and Eaco Corp
The main advantage of trading using opposite Optical Cable and Eaco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optical Cable position performs unexpectedly, Eaco Corp 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 Eaco Corp will offset losses from the drop in Eaco Corp's long position.| Optical Cable vs. KVH Industries | Optical Cable vs. Knowles Cor | Optical Cable vs. Comtech Telecommunications Corp | Optical Cable vs. Lantronix |
| Eaco Corp vs. Climb Global Solutions | Eaco Corp vs. Insight Enterprises | Eaco Corp vs. ScanSource | Eaco Corp vs. Synnex |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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