Correlation Between Hi Clearance and Eagle Cold

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

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

Diversification Opportunities for Hi Clearance and Eagle Cold

-0.13

Correlation Coefficient

Hi Clearance  Eagle Cold

Good diversification

The 3 months correlation between 1788 and Eagle is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hi Clearance and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage and Hi Clearance 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 Hi Clearance are associated (or correlated) with Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Hi Clearance i.e., Hi Clearance and Eagle Cold go up and down completely randomly.

Pair Corralation between Hi Clearance and Eagle Cold

Assuming the 90 days trading horizon Hi Clearance is expected to generate 1.27 times less return on investment than Eagle Cold. But when comparing it to its historical volatility, Hi Clearance is 1.91 times less risky than Eagle Cold. It trades about 0.07 of its potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,774  in Eagle Cold Storage on September 13, 2024 and sell it today you would earn a total of  256.00  from holding Eagle Cold Storage or generate 9.23% return on investment over 90 days.

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

Hi Clearance  vs.  Eagle Cold Storage

Hi Clearance

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hi Clearance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hi Clearance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eagle Cold Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Cold Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eagle Cold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hi Clearance and Eagle Cold

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

The idea behind Hi Clearance and Eagle Cold Storage 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.