Correlation Between Energy Revenue and Eco Depot

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

By analyzing existing cross correlation between Energy Revenue Amer and Eco Depot, you can compare the effects of market volatilities on Energy Revenue and Eco Depot 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 Energy Revenue with a short position of Eco Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Revenue and Eco Depot.

Diversification Opportunities for Energy Revenue and Eco Depot

-0.78

Correlation Coefficient

Energy Revenue  Eco Depot

Pay attention - limited upside

The 3 months correlation between Energy and Eco is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Energy Revenue Amer and Eco Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Depot and Energy Revenue 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 Energy Revenue Amer are associated (or correlated) with Eco Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Depot has no effect on the direction of Energy Revenue i.e., Energy Revenue and Eco Depot go up and down completely randomly.

Pair Corralation between Energy Revenue and Eco Depot

Given the investment horizon of 90 days Energy Revenue Amer is expected to generate 1.54 times more return on investment than Eco Depot. However, Energy Revenue is 1.54 times more volatile than Eco Depot. It trades about 0.13 of its potential returns per unit of risk. Eco Depot is currently generating about -0.02 per unit of risk. If you would invest  1.90  in Energy Revenue Amer on September 4, 2024 and sell it today you would earn a total of  1.61  from holding Energy Revenue Amer or generate 84.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Energy Revenue Amer  vs.  Eco Depot

Energy Revenue Amer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Revenue Amer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Energy Revenue displayed solid returns over the last few months and may actually be approaching a breakup point.

Eco Depot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Depot has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energy Revenue and Eco Depot

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

The idea behind Energy Revenue Amer and Eco Depot 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.