Correlation Between Emerald Expositions and Mirriad Advertising

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

By analyzing existing cross correlation between Emerald Expositions Events and Mirriad Advertising plc, you can compare the effects of market volatilities on Emerald Expositions and Mirriad Advertising 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 Emerald Expositions with a short position of Mirriad Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Expositions and Mirriad Advertising.

Diversification Opportunities for Emerald Expositions and Mirriad Advertising

0.57

Correlation Coefficient

Emerald Expositions  Mirriad Advertising

Very weak diversification

The 3 months correlation between Emerald and Mirriad is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Expositions Events and Mirriad Advertising plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirriad Advertising plc and Emerald Expositions 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 Emerald Expositions Events are associated (or correlated) with Mirriad Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirriad Advertising plc has no effect on the direction of Emerald Expositions i.e., Emerald Expositions and Mirriad Advertising go up and down completely randomly.

Pair Corralation between Emerald Expositions and Mirriad Advertising

Considering the 90-day investment horizon Emerald Expositions Events is expected to generate 0.6 times more return on investment than Mirriad Advertising. However, Emerald Expositions Events is 1.66 times less risky than Mirriad Advertising. It trades about -0.01 of its potential returns per unit of risk. Mirriad Advertising plc is currently generating about -0.18 per unit of risk. If you would invest  556.00  in Emerald Expositions Events on September 1, 2024 and sell it today you would lose (59.00) from holding Emerald Expositions Events or give up 10.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Emerald Expositions Events  vs.  Mirriad Advertising plc

Emerald Expositions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerald Expositions Events has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Emerald Expositions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mirriad Advertising plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirriad Advertising plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Emerald Expositions and Mirriad Advertising

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

The idea behind Emerald Expositions Events and Mirriad Advertising plc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.