Correlation Between Eco Depot and St Joe

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

By analyzing existing cross correlation between Eco Depot and St Joe Company, you can compare the effects of market volatilities on Eco Depot and St Joe 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 Eco Depot with a short position of St Joe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Depot and St Joe.

Diversification Opportunities for Eco Depot and St Joe

0.69

Correlation Coefficient

Eco Depot  St Joe

Poor diversification

The 3 months correlation between Eco and JOE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eco Depot and St Joe Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Joe Company and Eco Depot 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 Eco Depot are associated (or correlated) with St Joe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Joe Company has no effect on the direction of Eco Depot i.e., Eco Depot and St Joe go up and down completely randomly.

Pair Corralation between Eco Depot and St Joe

Given the investment horizon of 90 days Eco Depot is expected to generate 12.55 times more return on investment than St Joe. However, Eco Depot is 12.55 times more volatile than St Joe Company. It trades about 0.15 of its potential returns per unit of risk. St Joe Company is currently generating about 0.05 per unit of risk. If you would invest  3.80  in Eco Depot on December 25, 2024 and sell it today you would earn a total of  3.00  from holding Eco Depot or generate 78.95% return on investment over 90 days.

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

Eco Depot  vs.  St Joe Company

Eco Depot

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Depot are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Eco Depot reported solid returns over the last few months and may actually be approaching a breakup point.

St Joe Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in St Joe Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, St Joe is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eco Depot and St Joe

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

The idea behind Eco Depot and St Joe Company 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 Anywhere module to track or share privately all of your investments from the convenience of any device.