Correlation Between E I and Yield10 Bioscience

Can any of the company-specific risk be diversified away by investing in both E I and Yield10 Bioscience 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 E I and Yield10 Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E I du and Yield10 Bioscience, you can compare the effects of market volatilities on E I and Yield10 Bioscience 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 E I with a short position of Yield10 Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of E I and Yield10 Bioscience.

Diversification Opportunities for E I and Yield10 Bioscience

0.48

Correlation Coefficient

E I  Yield10 Bioscience

Very weak diversification

The 3 months correlation between CTA-PB and Yield10 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding E I du and Yield10 Bioscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yield10 Bioscience and E I 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 E I du are associated (or correlated) with Yield10 Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yield10 Bioscience has no effect on the direction of E I i.e., E I and Yield10 Bioscience go up and down completely randomly.

Pair Corralation between E I and Yield10 Bioscience

Assuming the 90 days trading horizon E I is expected to generate 17.61 times less return on investment than Yield10 Bioscience. But when comparing it to its historical volatility, E I du is 3.07 times less risky than Yield10 Bioscience. It trades about 0.01 of its potential returns per unit of risk. Yield10 Bioscience is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  171.00  in Yield10 Bioscience on September 3, 2024 and sell it today you would earn a total of  19.00  from holding Yield10 Bioscience or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.91%
Values	Daily Returns

E I du  vs.  Yield10 Bioscience

E I du

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E I du has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, E I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Yield10 Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yield10 Bioscience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Yield10 Bioscience is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with E I and Yield10 Bioscience

The main advantage of trading using opposite E I and Yield10 Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E I position performs unexpectedly, Yield10 Bioscience 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 Yield10 Bioscience will offset losses from the drop in Yield10 Bioscience's long position.

The idea behind E I du and Yield10 Bioscience 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.