Correlation Between TRX and EOS

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

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

Diversification Opportunities for TRX and EOS

-0.37

Correlation Coefficient

TRX  EOS

Very good diversification

The 3 months correlation between TRX and EOS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TRX and EOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOS and TRX 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 TRX are associated (or correlated) with EOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOS has no effect on the direction of TRX i.e., TRX and EOS go up and down completely randomly.

Pair Corralation between TRX and EOS

Assuming the 90 days trading horizon TRX is expected to generate 0.44 times more return on investment than EOS. However, TRX is 2.27 times less risky than EOS. It trades about 0.16 of its potential returns per unit of risk. EOS is currently generating about -0.01 per unit of risk. If you would invest  25.00  in TRX on April 25, 2025 and sell it today you would earn a total of  6.00  from holding TRX or generate 24.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TRX  vs.  EOS

TRX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRX are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRX exhibited solid returns over the last few months and may actually be approaching a breakup point.

EOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, EOS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TRX and EOS

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

The idea behind TRX and EOS 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.