Correlation Between Dearborn Partners and Emerald Banking

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

By analyzing existing cross correlation between Dearborn Partners Rising and Emerald Banking And, you can compare the effects of market volatilities on Dearborn Partners and Emerald Banking 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 Dearborn Partners with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dearborn Partners and Emerald Banking.

Diversification Opportunities for Dearborn Partners and Emerald Banking

0.78

Correlation Coefficient

Dearborn Partners  Emerald Banking

Poor diversification

The 3 months correlation between Dearborn and Emerald is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dearborn Partners Rising and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Dearborn Partners 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 Dearborn Partners Rising are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Dearborn Partners i.e., Dearborn Partners and Emerald Banking go up and down completely randomly.

Pair Corralation between Dearborn Partners and Emerald Banking

Assuming the 90 days horizon Dearborn Partners Rising is expected to under-perform the Emerald Banking. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dearborn Partners Rising is 3.01 times less risky than Emerald Banking. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Emerald Banking And is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,635  in Emerald Banking And on October 8, 2024 and sell it today you would earn a total of  152.00  from holding Emerald Banking And or generate 5.77% return on investment over 90 days.

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

Dearborn Partners Rising  vs.  Emerald Banking And

Dearborn Partners Rising

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerald Banking And

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Banking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dearborn Partners and Emerald Banking

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

The idea behind Dearborn Partners Rising and Emerald Banking And 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.