Correlation Between AstraZeneca PLC and EJF Investments

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

By analyzing existing cross correlation between AstraZeneca PLC and EJF Investments, you can compare the effects of market volatilities on AstraZeneca PLC and EJF Investments 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 AstraZeneca PLC with a short position of EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and EJF Investments.

Diversification Opportunities for AstraZeneca PLC and EJF Investments

0.31

Correlation Coefficient

AstraZeneca PLC  EJF Investments

Weak diversification

The 3 months correlation between AstraZeneca and EJF is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and EJF Investments go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and EJF Investments

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 0.72 times more return on investment than EJF Investments. However, AstraZeneca PLC is 1.39 times less risky than EJF Investments. It trades about 0.13 of its potential returns per unit of risk. EJF Investments is currently generating about 0.05 per unit of risk. If you would invest  1,043,450  in AstraZeneca PLC on December 24, 2024 and sell it today you would earn a total of  117,350  from holding AstraZeneca PLC or generate 11.25% return on investment over 90 days.

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

AstraZeneca PLC  vs.  EJF Investments

AstraZeneca PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AstraZeneca PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

EJF Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AstraZeneca PLC and EJF Investments

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

The idea behind AstraZeneca PLC and EJF Investments 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.