Correlation Between Radcom and Employers Holdings
Can any of the company-specific risk be diversified away by investing in both Radcom and Employers Holdings 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 Radcom and Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radcom and Employers Holdings, you can compare the effects of market volatilities on Radcom and Employers Holdings 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 Radcom with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radcom and Employers Holdings.
Diversification Opportunities for Radcom and Employers Holdings
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Radcom and Employers is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Radcom 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 Radcom are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of Radcom i.e., Radcom and Employers Holdings go up and down completely randomly.
Pair Corralation between Radcom and Employers Holdings
Given the investment horizon of 90 days Radcom is expected to generate 1.88 times more return on investment than Employers Holdings. However, Radcom is 1.88 times more volatile than Employers Holdings. It trades about 0.02 of its potential returns per unit of risk. Employers Holdings is currently generating about 0.04 per unit of risk. If you would invest 1,014 in Radcom on August 24, 2024 and sell it today you would earn a total of 148.00 from holding Radcom or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radcom vs. Employers Holdings
Performance |
| Timeline |
| Radcom |
| Employers Holdings |
Radcom and Employers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radcom and Employers Holdings
The main advantage of trading using opposite Radcom and Employers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radcom position performs unexpectedly, Employers Holdings 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 Employers Holdings will offset losses from the drop in Employers Holdings' long position.| Radcom vs. Shenandoah Telecommunications Co | Radcom vs. Anterix | Radcom vs. SK Telecom Co | Radcom vs. Liberty Broadband Srs |
| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
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 Correlations module to find global opportunities by holding instruments from different markets.
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