Correlation Between Eurocastle Investment and Vanguard USD

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

By analyzing existing cross correlation between Eurocastle Investment and Vanguard USD Treasury, you can compare the effects of market volatilities on Eurocastle Investment and Vanguard USD 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 Eurocastle Investment with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurocastle Investment and Vanguard USD.

Diversification Opportunities for Eurocastle Investment and Vanguard USD

-0.47

Correlation Coefficient

Eurocastle Investment  Vanguard USD

Very good diversification

The 3 months correlation between Eurocastle and Vanguard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eurocastle Investment and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury and Eurocastle Investment 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 Eurocastle Investment are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of Eurocastle Investment i.e., Eurocastle Investment and Vanguard USD go up and down completely randomly.

Pair Corralation between Eurocastle Investment and Vanguard USD

Assuming the 90 days trading horizon Eurocastle Investment is expected to generate 12.52 times more return on investment than Vanguard USD. However, Eurocastle Investment is 12.52 times more volatile than Vanguard USD Treasury. It trades about 0.02 of its potential returns per unit of risk. Vanguard USD Treasury is currently generating about 0.03 per unit of risk. If you would invest  765.00  in Eurocastle Investment on September 16, 2024 and sell it today you would lose (25.00) from holding Eurocastle Investment or give up 3.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.05%
Values	Daily Returns

Eurocastle Investment  vs.  Vanguard USD Treasury

Eurocastle Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocastle Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eurocastle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard USD Treasury

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard USD Treasury are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vanguard USD is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eurocastle Investment and Vanguard USD

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

The idea behind Eurocastle Investment and Vanguard USD Treasury 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.