Correlation Between Freightcar America and Emeren
Can any of the company-specific risk be diversified away by investing in both Freightcar America and Emeren 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 Freightcar America and Emeren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freightcar America and Emeren Group, you can compare the effects of market volatilities on Freightcar America and Emeren 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 Freightcar America with a short position of Emeren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightcar America and Emeren.
Diversification Opportunities for Freightcar America and Emeren
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freightcar and Emeren is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Freightcar America and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group and Freightcar America 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 Freightcar America are associated (or correlated) with Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Freightcar America i.e., Freightcar America and Emeren go up and down completely randomly.
Pair Corralation between Freightcar America and Emeren
Given the investment horizon of 90 days Freightcar America is expected to under-perform the Emeren. In addition to that, Freightcar America is 2.04 times more volatile than Emeren Group. It trades about -0.14 of its total potential returns per unit of risk. Emeren Group is currently generating about -0.25 per unit of volatility. If you would invest 246.00 in Emeren Group on August 27, 2024 and sell it today you would lose (59.00) from holding Emeren Group or give up 23.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freightcar America vs. Emeren Group
Performance |
| Timeline |
| Freightcar America |
| Emeren Group |
Freightcar America and Emeren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freightcar America and Emeren
The main advantage of trading using opposite Freightcar America and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightcar America position performs unexpectedly, Emeren 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 Emeren will offset losses from the drop in Emeren's long position.| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. Westinghouse Air Brake | Freightcar America vs. CSX Corporation |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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