Correlation Between E Split and Life Banc

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

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

Diversification Opportunities for E Split and Life Banc

0.93

Correlation Coefficient

E Split  Life Banc

Almost no diversification

The 3 months correlation between ENS and Life is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Life Banc Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Banc Split and E Split 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 Split Corp are associated (or correlated) with Life Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Banc Split has no effect on the direction of E Split i.e., E Split and Life Banc go up and down completely randomly.

Pair Corralation between E Split and Life Banc

Assuming the 90 days trading horizon E Split is expected to generate 1.98 times less return on investment than Life Banc. But when comparing it to its historical volatility, E Split Corp is 1.24 times less risky than Life Banc. It trades about 0.28 of its potential returns per unit of risk. Life Banc Split is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  872.00  in Life Banc Split on August 31, 2024 and sell it today you would earn a total of  98.00  from holding Life Banc Split or generate 11.24% return on investment over 90 days.

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

E Split Corp  vs.  Life Banc Split

E Split Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, E Split displayed solid returns over the last few months and may actually be approaching a breakup point.

Life Banc Split

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Life Banc Split are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Life Banc displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E Split and Life Banc

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

The idea behind E Split Corp and Life Banc Split 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.