Correlation Between Everest and Associated Capital

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

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

Diversification Opportunities for Everest and Associated Capital

-0.61

Correlation Coefficient

Everest  Associated Capital

Excellent diversification

The 3 months correlation between Everest and Associated is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and Everest 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 Everest Group are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Everest i.e., Everest and Associated Capital go up and down completely randomly.

Pair Corralation between Everest and Associated Capital

Allowing for the 90-day total investment horizon Everest is expected to generate 5.07 times less return on investment than Associated Capital. But when comparing it to its historical volatility, Everest Group is 1.29 times less risky than Associated Capital. It trades about 0.02 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,536  in Associated Capital Group on December 30, 2024 and sell it today you would earn a total of  295.00  from holding Associated Capital Group or generate 8.34% return on investment over 90 days.

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

Everest Group  vs.  Associated Capital Group

Everest Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Associated Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Everest and Associated Capital

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

The idea behind Everest Group and Associated Capital 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.