Correlation Between ESE Entertainment and Dye Durham

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

By analyzing existing cross correlation between ESE Entertainment and Dye Durham, you can compare the effects of market volatilities on ESE Entertainment and Dye Durham 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 ESE Entertainment with a short position of Dye Durham. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESE Entertainment and Dye Durham.

Diversification Opportunities for ESE Entertainment and Dye Durham

-0.76

Correlation Coefficient

ESE Entertainment  Dye Durham

Pay attention - limited upside

The 3 months correlation between ESE and Dye is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Dye Durham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dye Durham and ESE Entertainment 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 ESE Entertainment are associated (or correlated) with Dye Durham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dye Durham has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Dye Durham go up and down completely randomly.

Pair Corralation between ESE Entertainment and Dye Durham

Assuming the 90 days horizon ESE Entertainment is expected to under-perform the Dye Durham. In addition to that, ESE Entertainment is 1.51 times more volatile than Dye Durham. It trades about -0.13 of its total potential returns per unit of risk. Dye Durham is currently generating about 0.2 per unit of volatility. If you would invest  1,393  in Dye Durham on September 16, 2024 and sell it today you would earn a total of  806.00  from holding Dye Durham or generate 57.86% return on investment over 90 days.

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

ESE Entertainment  vs.  Dye Durham

ESE Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESE Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Dye Durham

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dye Durham are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Dye Durham displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESE Entertainment and Dye Durham

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

The idea behind ESE Entertainment and Dye Durham 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.