Correlation Between Eastwood Bio and Flow Beverage

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Can any of the company-specific risk be diversified away by investing in both Eastwood Bio and Flow Beverage 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 Eastwood Bio and Flow Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastwood Bio Medical Canada and Flow Beverage Corp, you can compare the effects of market volatilities on Eastwood Bio and Flow Beverage 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 Eastwood Bio with a short position of Flow Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Flow Beverage.

Diversification Opportunities for Eastwood Bio and Flow Beverage

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Eastwood and Flow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Flow Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Beverage Corp and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Flow Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Beverage Corp has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Flow Beverage go up and down completely randomly.

Pair Corralation between Eastwood Bio and Flow Beverage

Assuming the 90 days horizon Eastwood Bio is expected to generate 5.21 times less return on investment than Flow Beverage. In addition to that, Eastwood Bio is 4.26 times more volatile than Flow Beverage Corp. It trades about 0.0 of its total potential returns per unit of risk. Flow Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest  16.00  in Flow Beverage Corp on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Flow Beverage Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Eastwood Bio Medical Canada  vs.  Flow Beverage Corp

 Performance 
       Timeline  
Eastwood Bio Medical 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Eastwood Bio Medical Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eastwood Bio showed solid returns over the last few months and may actually be approaching a breakup point.
Flow Beverage Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Flow Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Flow Beverage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Eastwood Bio and Flow Beverage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastwood Bio and Flow Beverage

The main advantage of trading using opposite Eastwood Bio and Flow Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio position performs unexpectedly, Flow Beverage 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 Flow Beverage will offset losses from the drop in Flow Beverage's long position.
The idea behind Eastwood Bio Medical Canada and Flow Beverage Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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