Correlation Between ECN Capital and Real Estate

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

By analyzing existing cross correlation between ECN Capital Corp and Real Estate E Commerce, you can compare the effects of market volatilities on ECN Capital and Real Estate 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 ECN Capital with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and Real Estate.

Diversification Opportunities for ECN Capital and Real Estate

-0.7

Correlation Coefficient

ECN Capital  Real Estate

Excellent diversification

The 3 months correlation between ECN and Real is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and Real Estate E Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate E and ECN Capital 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 ECN Capital Corp are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate E has no effect on the direction of ECN Capital i.e., ECN Capital and Real Estate go up and down completely randomly.

Pair Corralation between ECN Capital and Real Estate

Assuming the 90 days trading horizon ECN Capital Corp is expected to under-perform the Real Estate. In addition to that, ECN Capital is 1.67 times more volatile than Real Estate E Commerce. It trades about -0.17 of its total potential returns per unit of risk. Real Estate E Commerce is currently generating about -0.15 per unit of volatility. If you would invest  1,194  in Real Estate E Commerce on September 12, 2024 and sell it today you would lose (43.00) from holding Real Estate E Commerce or give up 3.6% of portfolio value over 90 days.

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

ECN Capital Corp  vs.  Real Estate E Commerce

ECN Capital Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECN Capital Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ECN Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Real Estate E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate E Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ECN Capital and Real Estate

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

The idea behind ECN Capital Corp and Real Estate E Commerce 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .