Correlation Between Echiquier Entrepreneurs and FF European

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

By analyzing existing cross correlation between Echiquier Entrepreneurs G and FF European, you can compare the effects of market volatilities on Echiquier Entrepreneurs and FF European 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 Echiquier Entrepreneurs with a short position of FF European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echiquier Entrepreneurs and FF European.

Diversification Opportunities for Echiquier Entrepreneurs and FF European

0.15

Correlation Coefficient

Echiquier Entrepreneurs  FF European

Average diversification

The 3 months correlation between Echiquier and FJ2B is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Echiquier Entrepreneurs G and FF European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF European and Echiquier Entrepreneurs 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 Echiquier Entrepreneurs G are associated (or correlated) with FF European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF European has no effect on the direction of Echiquier Entrepreneurs i.e., Echiquier Entrepreneurs and FF European go up and down completely randomly.

Pair Corralation between Echiquier Entrepreneurs and FF European

Assuming the 90 days trading horizon Echiquier Entrepreneurs is expected to generate 2.18 times less return on investment than FF European. In addition to that, Echiquier Entrepreneurs is 1.13 times more volatile than FF European. It trades about 0.03 of its total potential returns per unit of risk. FF European is currently generating about 0.08 per unit of volatility. If you would invest  1,763  in FF European on October 5, 2024 and sell it today you would earn a total of  235.00  from holding FF European or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.2%
Values	Daily Returns

Echiquier Entrepreneurs G  vs.  FF European

Echiquier Entrepreneurs

Risk-Adjusted Performance

0 of 100

Very Weak

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

FF European

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days FF European has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, FF European is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Echiquier Entrepreneurs and FF European

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

The idea behind Echiquier Entrepreneurs G and FF European 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.