Correlation Between Eastern and Tigo Energy

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

By analyzing existing cross correlation between Eastern Co and Tigo Energy, you can compare the effects of market volatilities on Eastern and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Tigo Energy.

Diversification Opportunities for Eastern and Tigo Energy

0.71

Correlation Coefficient

Eastern  Tigo Energy

Poor diversification

The 3 months correlation between Eastern and Tigo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Eastern i.e., Eastern and Tigo Energy go up and down completely randomly.

Pair Corralation between Eastern and Tigo Energy

Considering the 90-day investment horizon Eastern Co is expected to generate 0.41 times more return on investment than Tigo Energy. However, Eastern Co is 2.44 times less risky than Tigo Energy. It trades about 0.04 of its potential returns per unit of risk. Tigo Energy is currently generating about -0.03 per unit of risk. If you would invest  1,904  in Eastern Co on September 24, 2024 and sell it today you would earn a total of  855.00  from holding Eastern Co or generate 44.91% return on investment over 90 days.

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

Eastern Co  vs.  Tigo Energy

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Tigo Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eastern and Tigo Energy

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

The idea behind Eastern Co and Tigo Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.