Correlation Between ECN Capital and TDb Split

Can any of the company-specific risk be diversified away by investing in both ECN Capital and TDb Split 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 ECN Capital and TDb Split into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECN Capital Corp and TDb Split Corp, you can compare the effects of market volatilities on ECN Capital and TDb Split 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 ECN Capital with a short position of TDb Split. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and TDb Split.

Diversification Opportunities for ECN Capital and TDb Split

0.14

Correlation Coefficient

ECN Capital  TDb Split

Average diversification

The 3 months correlation between ECN and TDb is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and TDb Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDb Split Corp and ECN Capital 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 ECN Capital Corp are associated (or correlated) with TDb Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDb Split Corp has no effect on the direction of ECN Capital i.e., ECN Capital and TDb Split go up and down completely randomly.

Pair Corralation between ECN Capital and TDb Split

Assuming the 90 days trading horizon ECN Capital Corp is expected to under-perform the TDb Split. But the stock apears to be less risky and, when comparing its historical volatility, ECN Capital Corp is 1.14 times less risky than TDb Split. The stock trades about -0.07 of its potential returns per unit of risk. The TDb Split Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  330.00  in TDb Split Corp on December 27, 2024 and sell it today you would earn a total of  30.00  from holding TDb Split Corp or generate 9.09% return on investment over 90 days.

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

ECN Capital Corp  vs.  TDb Split Corp

ECN Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECN Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TDb Split Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TDb Split Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, TDb Split may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ECN Capital and TDb Split

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

The idea behind ECN Capital Corp and TDb Split 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.