Correlation Between Dana Epiphany and Dana Small

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

By analyzing existing cross correlation between Dana Epiphany Esg and Dana Small Cap, you can compare the effects of market volatilities on Dana Epiphany and Dana Small 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 Dana Epiphany with a short position of Dana Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Epiphany and Dana Small.

Diversification Opportunities for Dana Epiphany and Dana Small

0.94

Correlation Coefficient

Dana Epiphany  Dana Small

Almost no diversification

The 3 months correlation between Dana and Dana is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dana Epiphany Esg and Dana Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Small Cap and Dana Epiphany 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 Dana Epiphany Esg are associated (or correlated) with Dana Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Small Cap has no effect on the direction of Dana Epiphany i.e., Dana Epiphany and Dana Small go up and down completely randomly.

Pair Corralation between Dana Epiphany and Dana Small

Assuming the 90 days horizon Dana Epiphany is expected to generate 1.07 times less return on investment than Dana Small. But when comparing it to its historical volatility, Dana Epiphany Esg is 1.67 times less risky than Dana Small. It trades about 0.17 of its potential returns per unit of risk. Dana Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,436  in Dana Small Cap on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Dana Small Cap or generate 8.08% return on investment over 90 days.

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

Dana Epiphany Esg  vs.  Dana Small Cap

Dana Epiphany Esg

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Epiphany Esg are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dana Epiphany may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dana Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dana Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dana Epiphany and Dana Small

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

The idea behind Dana Epiphany Esg and Dana Small Cap 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.