Correlation Between Westell Technologies and Eaco Corp
Can any of the company-specific risk be diversified away by investing in both Westell Technologies and Eaco Corp 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 Westell Technologies and Eaco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westell Technologies and Eaco Corp, you can compare the effects of market volatilities on Westell Technologies and Eaco Corp 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 Westell Technologies with a short position of Eaco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westell Technologies and Eaco Corp.
Diversification Opportunities for Westell Technologies and Eaco Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westell and Eaco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Westell Technologies and Eaco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaco Corp and Westell Technologies 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 Westell Technologies are associated (or correlated) with Eaco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaco Corp has no effect on the direction of Westell Technologies i.e., Westell Technologies and Eaco Corp go up and down completely randomly.
Pair Corralation between Westell Technologies and Eaco Corp
Given the investment horizon of 90 days Westell Technologies is expected to generate 1.3 times more return on investment than Eaco Corp. However, Westell Technologies is 1.3 times more volatile than Eaco Corp. It trades about 0.14 of its potential returns per unit of risk. Eaco Corp is currently generating about 0.04 per unit of risk. If you would invest 122.00 in Westell Technologies on August 24, 2024 and sell it today you would earn a total of 18.00 from holding Westell Technologies or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 26.42% |
| Values | Daily Returns |
Westell Technologies vs. Eaco Corp
Performance |
| Timeline |
| Westell Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Eaco Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westell Technologies and Eaco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westell Technologies and Eaco Corp
The main advantage of trading using opposite Westell Technologies and Eaco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westell Technologies position performs unexpectedly, Eaco Corp 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 Eaco Corp will offset losses from the drop in Eaco Corp's long position.| Westell Technologies vs. KVH Industries | Westell Technologies vs. Telesat Corp | Westell Technologies vs. Mynaric AG ADR | Westell Technologies vs. Knowles Cor |
| Eaco Corp vs. Climb Global Solutions | Eaco Corp vs. Insight Enterprises | Eaco Corp vs. ScanSource | Eaco Corp vs. Synnex |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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