Correlation Between EBEST Investment and Eugene Investment

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Can any of the company-specific risk be diversified away by investing in both EBEST Investment and Eugene Investment 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 EBEST Investment and Eugene Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBEST Investment Securities and Eugene Investment Securities, you can compare the effects of market volatilities on EBEST Investment and Eugene Investment 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 EBEST Investment with a short position of Eugene Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Eugene Investment.

Diversification Opportunities for EBEST Investment and Eugene Investment

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between EBEST and Eugene is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Eugene Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Investment and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Eugene Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Investment has no effect on the direction of EBEST Investment i.e., EBEST Investment and Eugene Investment go up and down completely randomly.

Pair Corralation between EBEST Investment and Eugene Investment

Assuming the 90 days trading horizon EBEST Investment is expected to generate 1.04 times less return on investment than Eugene Investment. But when comparing it to its historical volatility, EBEST Investment Securities is 1.08 times less risky than Eugene Investment. It trades about 0.2 of its potential returns per unit of risk. Eugene Investment Securities is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  259,000  in Eugene Investment Securities on April 23, 2025 and sell it today you would earn a total of  123,000  from holding Eugene Investment Securities or generate 47.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

EBEST Investment Securities  vs.  Eugene Investment Securities

 Performance 
       Timeline  
EBEST Investment Sec 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in EBEST Investment Securities are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBEST Investment sustained solid returns over the last few months and may actually be approaching a breakup point.
Eugene Investment 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Investment Securities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

EBEST Investment and Eugene Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EBEST Investment and Eugene Investment

The main advantage of trading using opposite EBEST Investment and Eugene Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, Eugene Investment 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 Eugene Investment will offset losses from the drop in Eugene Investment's long position.
The idea behind EBEST Investment Securities and Eugene Investment Securities 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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