Correlation Between Evertz Technologies and 437076BK7

Can any of the company-specific risk be diversified away by investing in both Evertz Technologies and 437076BK7 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 Evertz Technologies and 437076BK7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evertz Technologies Limited and HOME DEPOT INC, you can compare the effects of market volatilities on Evertz Technologies and 437076BK7 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 Evertz Technologies with a short position of 437076BK7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertz Technologies and 437076BK7.

Diversification Opportunities for Evertz Technologies and 437076BK7

-0.14

Correlation Coefficient

Evertz Technologies  437076BK7

Good diversification

The 3 months correlation between Evertz and 437076BK7 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Evertz Technologies Limited and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC and Evertz Technologies 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 Evertz Technologies Limited are associated (or correlated) with 437076BK7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT INC has no effect on the direction of Evertz Technologies i.e., Evertz Technologies and 437076BK7 go up and down completely randomly.

Pair Corralation between Evertz Technologies and 437076BK7

Assuming the 90 days horizon Evertz Technologies Limited is expected to generate 2.42 times more return on investment than 437076BK7. However, Evertz Technologies is 2.42 times more volatile than HOME DEPOT INC. It trades about 0.11 of its potential returns per unit of risk. HOME DEPOT INC is currently generating about -0.14 per unit of risk. If you would invest  842.00  in Evertz Technologies Limited on September 14, 2024 and sell it today you would earn a total of  32.00  from holding Evertz Technologies Limited or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Evertz Technologies Limited  vs.  HOME DEPOT INC

Evertz Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evertz Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

HOME DEPOT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076BK7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evertz Technologies and 437076BK7

The main advantage of trading using opposite Evertz Technologies and 437076BK7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertz Technologies position performs unexpectedly, 437076BK7 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 437076BK7 will offset losses from the drop in 437076BK7's long position.

The idea behind Evertz Technologies Limited and HOME DEPOT INC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.