Correlation Between Pershing Square and Eurocastle Investment
Can any of the company-specific risk be diversified away by investing in both Pershing Square and Eurocastle Investment 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 Pershing Square and Eurocastle Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pershing Square Holdings and Eurocastle Investment, you can compare the effects of market volatilities on Pershing Square and Eurocastle Investment 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 Pershing Square with a short position of Eurocastle Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pershing Square and Eurocastle Investment.
Diversification Opportunities for Pershing Square and Eurocastle Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pershing and Eurocastle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pershing Square Holdings and Eurocastle Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurocastle Investment and Pershing Square 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 Pershing Square Holdings are associated (or correlated) with Eurocastle Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurocastle Investment has no effect on the direction of Pershing Square i.e., Pershing Square and Eurocastle Investment go up and down completely randomly.
Pair Corralation between Pershing Square and Eurocastle Investment
Assuming the 90 days trading horizon Pershing Square Holdings is expected to generate 0.21 times more return on investment than Eurocastle Investment. However, Pershing Square Holdings is 4.72 times less risky than Eurocastle Investment. It trades about 0.31 of its potential returns per unit of risk. Eurocastle Investment is currently generating about -0.44 per unit of risk. If you would invest 4,446 in Pershing Square Holdings on September 1, 2024 and sell it today you would earn a total of 344.00 from holding Pershing Square Holdings or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.91% |
| Values | Daily Returns |
Pershing Square Holdings vs. Eurocastle Investment
Performance |
| Timeline |
| Pershing Square Holdings |
| Eurocastle Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pershing Square and Eurocastle Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pershing Square and Eurocastle Investment
The main advantage of trading using opposite Pershing Square and Eurocastle Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pershing Square position performs unexpectedly, Eurocastle Investment 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 Eurocastle Investment will offset losses from the drop in Eurocastle Investment's long position.| Pershing Square vs. Pershing Square Holdings | Pershing Square vs. Universal Music Group | Pershing Square vs. Hydratec Industries NV | Pershing Square vs. BlackRock ESG Multi Asset |
| Eurocastle Investment vs. Tetragon Financial Group | Eurocastle Investment vs. Ctac NV | Eurocastle Investment vs. iShares SP 500 | Eurocastle Investment vs. Hydratec Industries NV |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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