Correlation Between Ep Emerging and North Square

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

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

Diversification Opportunities for Ep Emerging and North Square

0.84

Correlation Coefficient

Ep Emerging  North Square

Very poor diversification

The 3 months correlation between EPEIX and North is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and North Square Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Square Investments and Ep Emerging 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 Ep Emerging Markets are associated (or correlated) with North Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Square Investments has no effect on the direction of Ep Emerging i.e., Ep Emerging and North Square go up and down completely randomly.

Pair Corralation between Ep Emerging and North Square

Assuming the 90 days horizon Ep Emerging is expected to generate 3.69 times less return on investment than North Square. But when comparing it to its historical volatility, Ep Emerging Markets is 1.09 times less risky than North Square. It trades about 0.08 of its potential returns per unit of risk. North Square Investments is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,056  in North Square Investments on December 2, 2024 and sell it today you would earn a total of  84.00  from holding North Square Investments or generate 7.95% return on investment over 90 days.

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

Ep Emerging Markets  vs.  North Square Investments

Ep Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ep Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ep Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

North Square Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in North Square Investments are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, North Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ep Emerging and North Square

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

The idea behind Ep Emerging Markets and North Square Investments 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.