Correlation Between Dana Large and Dana Epiphany

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

By analyzing existing cross correlation between Dana Large Cap and Dana Epiphany Esg, you can compare the effects of market volatilities on Dana Large and Dana Epiphany 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 Dana Large with a short position of Dana Epiphany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Dana Epiphany.

Diversification Opportunities for Dana Large and Dana Epiphany

0.52

Correlation Coefficient

Dana Large  Dana Epiphany

Very weak diversification

The 3 months correlation between Dana and Dana is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Dana Epiphany Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Epiphany Esg and Dana Large 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 Dana Large Cap are associated (or correlated) with Dana Epiphany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Epiphany Esg has no effect on the direction of Dana Large i.e., Dana Large and Dana Epiphany go up and down completely randomly.

Pair Corralation between Dana Large and Dana Epiphany

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Dana Epiphany. In addition to that, Dana Large is 2.83 times more volatile than Dana Epiphany Esg. It trades about -0.13 of its total potential returns per unit of risk. Dana Epiphany Esg is currently generating about -0.05 per unit of volatility. If you would invest  1,606  in Dana Epiphany Esg on November 28, 2024 and sell it today you would lose (46.00) from holding Dana Epiphany Esg or give up 2.86% of portfolio value over 90 days.

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

Dana Large Cap  vs.  Dana Epiphany Esg

Dana Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dana Epiphany Esg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Epiphany Esg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dana Epiphany is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dana Large and Dana Epiphany

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

The idea behind Dana Large Cap and Dana Epiphany Esg 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.