Correlation Between E I and Boswell J

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

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

Diversification Opportunities for E I and Boswell J

-0.58

Correlation Coefficient

E I  Boswell J

Excellent diversification

The 3 months correlation between CTA-PB and Boswell is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding E I du and Boswell J G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boswell J G and E I 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 E I du are associated (or correlated) with Boswell J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boswell J G has no effect on the direction of E I i.e., E I and Boswell J go up and down completely randomly.

Pair Corralation between E I and Boswell J

Assuming the 90 days trading horizon E I du is expected to under-perform the Boswell J. But the preferred stock apears to be less risky and, when comparing its historical volatility, E I du is 1.15 times less risky than Boswell J. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Boswell J G is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  54,526  in Boswell J G on September 16, 2024 and sell it today you would earn a total of  724.00  from holding Boswell J G or generate 1.33% return on investment over 90 days.

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

E I du  vs.  Boswell J G

E I du

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E I du has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, E I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Boswell J G

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boswell J G are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Boswell J is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with E I and Boswell J

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

The idea behind E I du and Boswell J G 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..