Correlation Between Worksport and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Worksport 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 Worksport and ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worksport and ECD Automotive Design, you can compare the effects of market volatilities on Worksport 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 Worksport with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worksport and ECD Automotive.
Diversification Opportunities for Worksport and ECD Automotive
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Worksport and ECD is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Worksport 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 Worksport 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 Worksport 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 Worksport i.e., Worksport and ECD Automotive go up and down completely randomly.
Pair Corralation between Worksport and ECD Automotive
Given the investment horizon of 90 days Worksport is expected to generate 2.18 times more return on investment than ECD Automotive. However, Worksport is 2.18 times more volatile than ECD Automotive Design. It trades about 0.13 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.09 per unit of risk. If you would invest 43.00 in Worksport on August 29, 2024 and sell it today you would earn a total of 18.00 from holding Worksport or generate 41.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worksport vs. ECD Automotive Design
Performance |
| Timeline |
| Worksport |
| ECD Automotive Design |
Worksport and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worksport and ECD Automotive
The main advantage of trading using opposite Worksport and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worksport 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.| Worksport vs. Aeye Inc | Worksport vs. Luminar Technologies | Worksport vs. Modine Manufacturing | Worksport vs. Quantumscape Corp |
| ECD Automotive vs. Bel Fuse A | ECD Automotive vs. QuickLogic | ECD Automotive vs. Treasury Wine Estates | ECD Automotive vs. Arrow Electronics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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