Correlation Between E Split and Life Banc

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

By analyzing existing cross correlation between E Split Corp and Life Banc Split, you can compare the effects of market volatilities on E Split and Life Banc 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 E Split with a short position of Life Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Life Banc.

Diversification Opportunities for E Split and Life Banc

0.19

Correlation Coefficient

E Split  Life Banc

Average diversification

The 3 months correlation between ENS and Life is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Life Banc Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Banc Split and E Split 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 E Split Corp are associated (or correlated) with Life Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Banc Split has no effect on the direction of E Split i.e., E Split and Life Banc go up and down completely randomly.

Pair Corralation between E Split and Life Banc

Assuming the 90 days trading horizon E Split Corp is expected to generate 0.79 times more return on investment than Life Banc. However, E Split Corp is 1.26 times less risky than Life Banc. It trades about 0.06 of its potential returns per unit of risk. Life Banc Split is currently generating about 0.0 per unit of risk. If you would invest  1,359  in E Split Corp on December 20, 2024 and sell it today you would earn a total of  58.00  from holding E Split Corp or generate 4.27% return on investment over 90 days.

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

E Split Corp  vs.  Life Banc Split

E Split Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, E Split is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Life Banc Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Life Banc Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Life Banc is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with E Split and Life Banc

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

The idea behind E Split Corp and Life Banc Split 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.