Correlation Between EPlus and Wag Group
Can any of the company-specific risk be diversified away by investing in both EPlus and Wag Group 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 EPlus and Wag Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ePlus inc and Wag Group Co, you can compare the effects of market volatilities on EPlus and Wag Group 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 EPlus with a short position of Wag Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPlus and Wag Group.
Diversification Opportunities for EPlus and Wag Group
Very poor diversification
The 3 months correlation between EPlus and Wag is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ePlus inc and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group and EPlus 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 ePlus inc are associated (or correlated) with Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of EPlus i.e., EPlus and Wag Group go up and down completely randomly.
Pair Corralation between EPlus and Wag Group
Given the investment horizon of 90 days ePlus inc is expected to generate 0.29 times more return on investment than Wag Group. However, ePlus inc is 3.51 times less risky than Wag Group. It trades about -0.04 of its potential returns per unit of risk. Wag Group Co is currently generating about -0.13 per unit of risk. If you would invest 8,999 in ePlus inc on August 31, 2024 and sell it today you would lose (918.00) from holding ePlus inc or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ePlus inc vs. Wag Group Co
Performance |
| Timeline |
| ePlus inc |
| Wag Group |
EPlus and Wag Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPlus and Wag Group
The main advantage of trading using opposite EPlus and Wag Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPlus position performs unexpectedly, Wag Group 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 Wag Group will offset losses from the drop in Wag Group's long position.The idea behind ePlus inc and Wag Group Co 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.| Wag Group vs. ePlus inc | Wag Group vs. Progress Software | Wag Group vs. Agilysys | Wag Group vs. Sapiens International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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