Correlation Between Emerald Expositions and NCS Multistage

Can any of the company-specific risk be diversified away by investing in both Emerald Expositions and NCS Multistage 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 NCS Multistage 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 NCS Multistage Holdings, you can compare the effects of market volatilities on Emerald Expositions and NCS Multistage 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 NCS Multistage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Expositions and NCS Multistage.

Diversification Opportunities for Emerald Expositions and NCS Multistage

0.48

Correlation Coefficient

Emerald Expositions  NCS Multistage

Very weak diversification

The 3 months correlation between Emerald and NCS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Expositions Events and NCS Multistage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCS Multistage Holdings 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 NCS Multistage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCS Multistage Holdings has no effect on the direction of Emerald Expositions i.e., Emerald Expositions and NCS Multistage go up and down completely randomly.

Pair Corralation between Emerald Expositions and NCS Multistage

Considering the 90-day investment horizon Emerald Expositions Events is expected to under-perform the NCS Multistage. But the stock apears to be less risky and, when comparing its historical volatility, Emerald Expositions Events is 2.26 times less risky than NCS Multistage. The stock trades about -0.09 of its potential returns per unit of risk. The NCS Multistage Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,837  in NCS Multistage Holdings on October 14, 2024 and sell it today you would lose (104.00) from holding NCS Multistage Holdings or give up 3.67% of portfolio value over 90 days.

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

Emerald Expositions Events  vs.  NCS Multistage Holdings

Emerald Expositions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Expositions Events are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Emerald Expositions showed solid returns over the last few months and may actually be approaching a breakup point.

NCS Multistage Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NCS Multistage Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, NCS Multistage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerald Expositions and NCS Multistage

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

The idea behind Emerald Expositions Events and NCS Multistage Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.