Correlation Between Eurocastle Investment and Allfunds

Can any of the company-specific risk be diversified away by investing in both Eurocastle Investment and Allfunds 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 Eurocastle Investment and Allfunds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eurocastle Investment and Allfunds Group, you can compare the effects of market volatilities on Eurocastle Investment and Allfunds 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 Eurocastle Investment with a short position of Allfunds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurocastle Investment and Allfunds.

Diversification Opportunities for Eurocastle Investment and Allfunds

-0.39

Correlation Coefficient

Eurocastle Investment  Allfunds

Very good diversification

The 3 months correlation between Eurocastle and Allfunds is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eurocastle Investment and Allfunds Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allfunds Group and Eurocastle 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 Eurocastle Investment are associated (or correlated) with Allfunds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allfunds Group has no effect on the direction of Eurocastle Investment i.e., Eurocastle Investment and Allfunds go up and down completely randomly.

Pair Corralation between Eurocastle Investment and Allfunds

Assuming the 90 days trading horizon Eurocastle Investment is expected to generate 1.15 times less return on investment than Allfunds. In addition to that, Eurocastle Investment is 4.83 times more volatile than Allfunds Group. It trades about 0.09 of its total potential returns per unit of risk. Allfunds Group is currently generating about 0.49 per unit of volatility. If you would invest  476.00  in Allfunds Group on April 20, 2025 and sell it today you would earn a total of  274.00  from holding Allfunds Group or generate 57.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

Eurocastle Investment  vs.  Allfunds Group

Eurocastle Investment

Risk-Adjusted Performance

Modest

Over the last 90 days Eurocastle Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Eurocastle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Allfunds Group

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Allfunds Group are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Allfunds sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurocastle Investment and Allfunds

The main advantage of trading using opposite Eurocastle Investment and Allfunds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurocastle Investment position performs unexpectedly, Allfunds 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 Allfunds will offset losses from the drop in Allfunds' long position.

The idea behind Eurocastle Investment and Allfunds Group 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.