Correlation Between Empire Global and Marks

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

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

Diversification Opportunities for Empire Global and Marks

0.17

Correlation Coefficient

Empire Global  Marks

Average diversification

The 3 months correlation between Empire and Marks is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Empire Global Gaming and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Empire Global 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 Empire Global Gaming are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Empire Global i.e., Empire Global and Marks go up and down completely randomly.

Pair Corralation between Empire Global and Marks

Given the investment horizon of 90 days Empire Global Gaming is expected to generate 79.29 times more return on investment than Marks. However, Empire Global is 79.29 times more volatile than Marks and Spencer. It trades about 0.28 of its potential returns per unit of risk. Marks and Spencer is currently generating about -0.04 per unit of risk. If you would invest  0.00  in Empire Global Gaming on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Empire Global Gaming or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	21.67%
Values	Daily Returns

Empire Global Gaming  vs.  Marks and Spencer

Empire Global Gaming

Risk-Adjusted Performance

Solid

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unfluctuating technical and fundamental indicators, Empire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Marks and Spencer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks and Spencer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Empire Global and Marks

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

The idea behind Empire Global Gaming and Marks and Spencer 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.