Correlation Between EOSDAC and PHB

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

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

Diversification Opportunities for EOSDAC and PHB

0.65

Correlation Coefficient

EOSDAC  PHB

Poor diversification

The 3 months correlation between EOSDAC and PHB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and PHB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHB and EOSDAC 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 EOSDAC are associated (or correlated) with PHB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHB has no effect on the direction of EOSDAC i.e., EOSDAC and PHB go up and down completely randomly.

Pair Corralation between EOSDAC and PHB

Assuming the 90 days trading horizon EOSDAC is expected to generate 1.68 times more return on investment than PHB. However, EOSDAC is 1.68 times more volatile than PHB. It trades about 0.04 of its potential returns per unit of risk. PHB is currently generating about 0.01 per unit of risk. If you would invest  0.05  in EOSDAC on September 13, 2024 and sell it today you would lose (0.01) from holding EOSDAC or give up 21.15% of portfolio value over 90 days.

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

EOSDAC  vs.  PHB

EOSDAC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

PHB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, PHB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOSDAC and PHB

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

The idea behind EOSDAC and PHB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.