Correlation Between EBEST Investment and NAU IB

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

By analyzing existing cross correlation between EBEST Investment Securities and NAU IB Capital, you can compare the effects of market volatilities on EBEST Investment and NAU IB 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 EBEST Investment with a short position of NAU IB. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and NAU IB.

Diversification Opportunities for EBEST Investment and NAU IB

-0.04

Correlation Coefficient

EBEST Investment  NAU IB

Good diversification

The 3 months correlation between EBEST and NAU is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and NAU IB Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAU IB Capital and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with NAU IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAU IB Capital has no effect on the direction of EBEST Investment i.e., EBEST Investment and NAU IB go up and down completely randomly.

Pair Corralation between EBEST Investment and NAU IB

Assuming the 90 days trading horizon EBEST Investment Securities is expected to generate 0.26 times more return on investment than NAU IB. However, EBEST Investment Securities is 3.88 times less risky than NAU IB. It trades about -0.1 of its potential returns per unit of risk. NAU IB Capital is currently generating about -0.03 per unit of risk. If you would invest  400,000  in EBEST Investment Securities on December 22, 2024 and sell it today you would lose (32,500) from holding EBEST Investment Securities or give up 8.12% of portfolio value over 90 days.

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

EBEST Investment Securities  vs.  NAU IB Capital

EBEST Investment Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days EBEST Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EBEST Investment and NAU IB

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

The idea behind EBEST Investment Securities and NAU IB Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.