Correlation Between Descartes Systems and EZFL Old

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

By analyzing existing cross correlation between Descartes Systems Group and EZFL Old, you can compare the effects of market volatilities on Descartes Systems and EZFL Old 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 Descartes Systems with a short position of EZFL Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Descartes Systems and EZFL Old.

Diversification Opportunities for Descartes Systems and EZFL Old

-0.27

Correlation Coefficient

Descartes Systems  EZFL Old

Very good diversification

The 3 months correlation between Descartes and EZFL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and EZFL Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZFL Old and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with EZFL Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZFL Old has no effect on the direction of Descartes Systems i.e., Descartes Systems and EZFL Old go up and down completely randomly.

Pair Corralation between Descartes Systems and EZFL Old

Given the investment horizon of 90 days Descartes Systems Group is expected to under-perform the EZFL Old. But the stock apears to be less risky and, when comparing its historical volatility, Descartes Systems Group is 3.94 times less risky than EZFL Old. The stock trades about -0.1 of its potential returns per unit of risk. The EZFL Old is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  332.00  in EZFL Old on December 30, 2024 and sell it today you would earn a total of  18.00  from holding EZFL Old or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.61%
Values	Daily Returns

Descartes Systems Group  vs.  EZFL Old

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

EZFL Old

Risk-Adjusted Performance

Insignificant

Over the last 90 days EZFL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite conflicting technical and fundamental indicators, EZFL Old disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Descartes Systems and EZFL Old

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

The idea behind Descartes Systems Group and EZFL Old 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 Commodity Directory module to find actively traded commodities issued by global exchanges.