Correlation Between Sothebys and Employers Holdings

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

By analyzing existing cross correlation between Sothebys 7375 percent and Employers Holdings, you can compare the effects of market volatilities on Sothebys and Employers Holdings 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 Sothebys with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sothebys and Employers Holdings.

Diversification Opportunities for Sothebys and Employers Holdings

0.08

Correlation Coefficient

Sothebys  Employers Holdings

Significant diversification

The 3 months correlation between Sothebys and Employers is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sothebys 7375 percent and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Sothebys 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 Sothebys 7375 percent are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of Sothebys i.e., Sothebys and Employers Holdings go up and down completely randomly.

Pair Corralation between Sothebys and Employers Holdings

Assuming the 90 days trading horizon Sothebys 7375 percent is expected to under-perform the Employers Holdings. In addition to that, Sothebys is 1.23 times more volatile than Employers Holdings. It trades about -0.03 of its total potential returns per unit of risk. Employers Holdings is currently generating about 0.09 per unit of volatility. If you would invest  4,730  in Employers Holdings on September 27, 2024 and sell it today you would earn a total of  401.00  from holding Employers Holdings or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.94%
Values	Daily Returns

Sothebys 7375 percent  vs.  Employers Holdings

Sothebys 7375 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sothebys 7375 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sothebys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Employers Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sothebys and Employers Holdings

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

The idea behind Sothebys 7375 percent and Employers Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.