Correlation Between Ecofibre and Dicker Data

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

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

Diversification Opportunities for Ecofibre and Dicker Data

0.06

Correlation Coefficient

Ecofibre  Dicker Data

Significant diversification

The 3 months correlation between Ecofibre and Dicker is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data and Ecofibre 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 Ecofibre are associated (or correlated) with Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of Ecofibre i.e., Ecofibre and Dicker Data go up and down completely randomly.

Pair Corralation between Ecofibre and Dicker Data

Assuming the 90 days trading horizon Ecofibre is expected to generate 4.49 times more return on investment than Dicker Data. However, Ecofibre is 4.49 times more volatile than Dicker Data. It trades about 0.03 of its potential returns per unit of risk. Dicker Data is currently generating about -0.09 per unit of risk. If you would invest  3.00  in Ecofibre on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Ecofibre or generate 0.0% return on investment over 90 days.

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

Ecofibre  vs.  Dicker Data

Ecofibre

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dicker Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dicker Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ecofibre and Dicker Data

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

The idea behind Ecofibre and Dicker Data 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.