Correlation Between Ecovyst and Destination

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Can any of the company-specific risk be diversified away by investing in both Ecovyst and Destination 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 Ecovyst and Destination into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecovyst and Destination XL Group, you can compare the effects of market volatilities on Ecovyst and Destination 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 Ecovyst with a short position of Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and Destination.

Diversification Opportunities for Ecovyst and Destination

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ecovyst and Destination is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Destination XL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destination XL Group and Ecovyst 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 Ecovyst are associated (or correlated) with Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destination XL Group has no effect on the direction of Ecovyst i.e., Ecovyst and Destination go up and down completely randomly.

Pair Corralation between Ecovyst and Destination

Given the investment horizon of 90 days Ecovyst is expected to generate 0.7 times more return on investment than Destination. However, Ecovyst is 1.43 times less risky than Destination. It trades about 0.1 of its potential returns per unit of risk. Destination XL Group is currently generating about 0.01 per unit of risk. If you would invest  656.00  in Ecovyst on October 8, 2024 and sell it today you would earn a total of  103.00  from holding Ecovyst or generate 15.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ecovyst  vs.  Destination XL Group

 Performance 
       Timeline  
Ecovyst 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.
Destination XL Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Destination XL Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Destination is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Ecovyst and Destination Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecovyst and Destination

The main advantage of trading using opposite Ecovyst and Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst position performs unexpectedly, Destination 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 Destination will offset losses from the drop in Destination's long position.
The idea behind Ecovyst and Destination XL Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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