Correlation Between Edinburgh Investment and Heavitree Brewery

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

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

Diversification Opportunities for Edinburgh Investment and Heavitree Brewery

0.2

Correlation Coefficient

Edinburgh Investment  Heavitree Brewery

Modest diversification

The 3 months correlation between Edinburgh and Heavitree is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Investment Trust and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and Edinburgh 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 Edinburgh Investment Trust are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Edinburgh Investment i.e., Edinburgh Investment and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Edinburgh Investment and Heavitree Brewery

Assuming the 90 days trading horizon Edinburgh Investment Trust is expected to generate 2.94 times more return on investment than Heavitree Brewery. However, Edinburgh Investment is 2.94 times more volatile than Heavitree Brewery. It trades about 0.27 of its potential returns per unit of risk. Heavitree Brewery is currently generating about 0.13 per unit of risk. If you would invest  73,674  in Edinburgh Investment Trust on April 22, 2025 and sell it today you would earn a total of  6,326  from holding Edinburgh Investment Trust or generate 8.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Edinburgh Investment Trust  vs.  Heavitree Brewery

Edinburgh Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edinburgh Investment Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Edinburgh Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Edinburgh Investment and Heavitree Brewery

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

The idea behind Edinburgh Investment Trust and Heavitree Brewery 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.