Correlation Between Rumble and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Rumble and ECD Automotive 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 Rumble and ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rumble Inc and ECD Automotive Design, you can compare the effects of market volatilities on Rumble and ECD Automotive 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 Rumble with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rumble and ECD Automotive.
Diversification Opportunities for Rumble and ECD Automotive
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rumble and ECD is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Rumble Inc and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design and Rumble 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 Rumble Inc are associated (or correlated) with ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Rumble i.e., Rumble and ECD Automotive go up and down completely randomly.
Pair Corralation between Rumble and ECD Automotive
Considering the 90-day investment horizon Rumble Inc is expected to generate 0.28 times more return on investment than ECD Automotive. However, Rumble Inc is 3.61 times less risky than ECD Automotive. It trades about 0.18 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.05 per unit of risk. If you would invest 584.00 in Rumble Inc on September 1, 2024 and sell it today you would earn a total of 126.00 from holding Rumble Inc or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Rumble Inc vs. ECD Automotive Design
Performance |
| Timeline |
| Rumble Inc |
| ECD Automotive Design |
Rumble and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rumble and ECD Automotive
The main advantage of trading using opposite Rumble and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rumble position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.The idea behind Rumble Inc and ECD Automotive Design 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.| ECD Automotive vs. Olympic Steel | ECD Automotive vs. Neogen | ECD Automotive vs. enVVeno Medical Corp | ECD Automotive vs. Xponential Fitness |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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