Correlation Between ECHO INVESTMENT and National Retail

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

By analyzing existing cross correlation between ECHO INVESTMENT ZY and National Retail Properties, you can compare the effects of market volatilities on ECHO INVESTMENT and National Retail 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 ECHO INVESTMENT with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and National Retail.

Diversification Opportunities for ECHO INVESTMENT and National Retail

-0.25

Correlation Coefficient

ECHO INVESTMENT  National Retail

Very good diversification

The 3 months correlation between ECHO and National is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and ECHO 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 ECHO INVESTMENT ZY are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and National Retail go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and National Retail

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.37 times more return on investment than National Retail. However, ECHO INVESTMENT is 1.37 times more volatile than National Retail Properties. It trades about 0.03 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.01 per unit of risk. If you would invest  99.00  in ECHO INVESTMENT ZY on December 2, 2024 and sell it today you would earn a total of  2.00  from holding ECHO INVESTMENT ZY or generate 2.02% return on investment over 90 days.

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

ECHO INVESTMENT ZY  vs.  National Retail Properties

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ECHO INVESTMENT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Retail Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ECHO INVESTMENT and National Retail

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

The idea behind ECHO INVESTMENT ZY and National Retail Properties 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.