Correlation Between Eastroc Beverage and Northern United

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

By analyzing existing cross correlation between Eastroc Beverage Group and Northern United Publishing, you can compare the effects of market volatilities on Eastroc Beverage and Northern United 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 Eastroc Beverage with a short position of Northern United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Northern United.

Diversification Opportunities for Eastroc Beverage and Northern United

0.73

Correlation Coefficient

Eastroc Beverage  Northern United

Poor diversification

The 3 months correlation between Eastroc and Northern is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Northern United go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Northern United

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 0.62 times more return on investment than Northern United. However, Eastroc Beverage Group is 1.6 times less risky than Northern United. It trades about 0.08 of its potential returns per unit of risk. Northern United Publishing is currently generating about 0.02 per unit of risk. If you would invest  12,997  in Eastroc Beverage Group on September 29, 2024 and sell it today you would earn a total of  11,389  from holding Eastroc Beverage Group or generate 87.63% return on investment over 90 days.

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

Eastroc Beverage Group  vs.  Northern United Publishing

Eastroc Beverage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Northern United Publ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northern United Publishing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northern United may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eastroc Beverage and Northern United

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

The idea behind Eastroc Beverage Group and Northern United Publishing 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.