Correlation Between EcoSynthetix and North American

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

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

Diversification Opportunities for EcoSynthetix and North American

-0.83

Correlation Coefficient

EcoSynthetix  North American

Pay attention - limited upside

The 3 months correlation between EcoSynthetix and North is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and EcoSynthetix 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 EcoSynthetix are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of EcoSynthetix i.e., EcoSynthetix and North American go up and down completely randomly.

Pair Corralation between EcoSynthetix and North American

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 1.13 times more return on investment than North American. However, EcoSynthetix is 1.13 times more volatile than North American Financial. It trades about 0.18 of its potential returns per unit of risk. North American Financial is currently generating about -0.11 per unit of risk. If you would invest  394.00  in EcoSynthetix on October 5, 2024 and sell it today you would earn a total of  27.00  from holding EcoSynthetix or generate 6.85% return on investment over 90 days.

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

EcoSynthetix  vs.  North American Financial

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

North American Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in North American Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, North American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EcoSynthetix and North American

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

The idea behind EcoSynthetix and North American Financial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.