Correlation Between ECGI Holdings and Everspin Technologies

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

By analyzing existing cross correlation between ECGI Holdings and Everspin Technologies, you can compare the effects of market volatilities on ECGI Holdings and Everspin Technologies 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 ECGI Holdings with a short position of Everspin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECGI Holdings and Everspin Technologies.

Diversification Opportunities for ECGI Holdings and Everspin Technologies

-0.31

Correlation Coefficient

ECGI Holdings  Everspin Technologies

Very good diversification

The 3 months correlation between ECGI and Everspin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ECGI Holdings and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies and ECGI Holdings 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 ECGI Holdings are associated (or correlated) with Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of ECGI Holdings i.e., ECGI Holdings and Everspin Technologies go up and down completely randomly.

Pair Corralation between ECGI Holdings and Everspin Technologies

Given the investment horizon of 90 days ECGI Holdings is expected to generate 5.61 times more return on investment than Everspin Technologies. However, ECGI Holdings is 5.61 times more volatile than Everspin Technologies. It trades about 0.01 of its potential returns per unit of risk. Everspin Technologies is currently generating about 0.02 per unit of risk. If you would invest  0.18  in ECGI Holdings on October 12, 2024 and sell it today you would lose (0.08) from holding ECGI Holdings or give up 44.44% of portfolio value over 90 days.

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

ECGI Holdings  vs.  Everspin Technologies

ECGI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECGI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating technical and fundamental indicators, ECGI Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Everspin Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ECGI Holdings and Everspin Technologies

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

The idea behind ECGI Holdings and Everspin Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.