Correlation Between Eskay Mining and Empress Royalty

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

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

Diversification Opportunities for Eskay Mining and Empress Royalty

0.07

Correlation Coefficient

Eskay Mining  Empress Royalty

Significant diversification

The 3 months correlation between Eskay and Empress is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Empress Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empress Royalty Corp and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Empress Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empress Royalty Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Empress Royalty go up and down completely randomly.

Pair Corralation between Eskay Mining and Empress Royalty

Assuming the 90 days horizon Eskay Mining Corp is expected to under-perform the Empress Royalty. In addition to that, Eskay Mining is 2.15 times more volatile than Empress Royalty Corp. It trades about -0.02 of its total potential returns per unit of risk. Empress Royalty Corp is currently generating about -0.01 per unit of volatility. If you would invest  36.00  in Empress Royalty Corp on September 14, 2024 and sell it today you would lose (2.00) from holding Empress Royalty Corp or give up 5.56% of portfolio value over 90 days.

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

Eskay Mining Corp  vs.  Empress Royalty Corp

Eskay Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eskay Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Empress Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empress Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Empress Royalty is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eskay Mining and Empress Royalty

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

The idea behind Eskay Mining Corp and Empress Royalty Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.