Correlation Between Eastern and Broadstone Net
Can any of the company-specific risk be diversified away by investing in both Eastern and Broadstone Net 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 Eastern and Broadstone Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Broadstone Net Lease, you can compare the effects of market volatilities on Eastern and Broadstone Net 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 Eastern with a short position of Broadstone Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Broadstone Net.
Diversification Opportunities for Eastern and Broadstone Net
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Broadstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and Eastern 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 Eastern Co are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of Eastern i.e., Eastern and Broadstone Net go up and down completely randomly.
Pair Corralation between Eastern and Broadstone Net
Considering the 90-day investment horizon Eastern Co is expected to generate 2.43 times more return on investment than Broadstone Net. However, Eastern is 2.43 times more volatile than Broadstone Net Lease. It trades about -0.04 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.37 per unit of risk. If you would invest 2,812 in Eastern Co on September 26, 2024 and sell it today you would lose (71.00) from holding Eastern Co or give up 2.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Eastern Co vs. Broadstone Net Lease
Performance |
Timeline |
Eastern |
Broadstone Net Lease |
Eastern and Broadstone Net Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eastern and Broadstone Net
The main advantage of trading using opposite Eastern and Broadstone Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, Broadstone Net 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 Broadstone Net will offset losses from the drop in Broadstone Net's long position.Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
Broadstone Net vs. Armada Hflr Pr | Broadstone Net vs. Brightspire Capital | Broadstone Net vs. Safehold | Broadstone Net vs. Essential Properties Realty |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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