Correlation Between Electra Real and Storage Drop

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

By analyzing existing cross correlation between Electra Real Estate and Storage Drop Storage, you can compare the effects of market volatilities on Electra Real and Storage Drop 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 Electra Real with a short position of Storage Drop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Real and Storage Drop.

Diversification Opportunities for Electra Real and Storage Drop

0.25

Correlation Coefficient

Electra Real  Storage Drop

Modest diversification

The 3 months correlation between Electra and Storage is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Electra Real Estate and Storage Drop Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Drop Storage and Electra Real 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 Electra Real Estate are associated (or correlated) with Storage Drop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Drop Storage has no effect on the direction of Electra Real i.e., Electra Real and Storage Drop go up and down completely randomly.

Pair Corralation between Electra Real and Storage Drop

Assuming the 90 days trading horizon Electra Real is expected to generate 16.3 times less return on investment than Storage Drop. But when comparing it to its historical volatility, Electra Real Estate is 3.62 times less risky than Storage Drop. It trades about 0.01 of its potential returns per unit of risk. Storage Drop Storage is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,630  in Storage Drop Storage on December 29, 2024 and sell it today you would earn a total of  40.00  from holding Storage Drop Storage or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.08%
Values	Daily Returns

Electra Real Estate  vs.  Storage Drop Storage

Electra Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electra Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Electra Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Storage Drop Storage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Storage Drop Storage are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Storage Drop sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electra Real and Storage Drop

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

The idea behind Electra Real Estate and Storage Drop Storage 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.