Correlation Between Equitable and Goeasy

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

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

Diversification Opportunities for Equitable and Goeasy

0.49

Correlation Coefficient

Equitable  Goeasy

Very weak diversification

The 3 months correlation between Equitable and Goeasy is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Equitable Group and goeasy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on goeasy and Equitable 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 Equitable Group are associated (or correlated) with Goeasy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of goeasy has no effect on the direction of Equitable i.e., Equitable and Goeasy go up and down completely randomly.

Pair Corralation between Equitable and Goeasy

Assuming the 90 days trading horizon Equitable Group is expected to generate 1.51 times more return on investment than Goeasy. However, Equitable is 1.51 times more volatile than goeasy. It trades about 0.11 of its potential returns per unit of risk. goeasy is currently generating about 0.15 per unit of risk. If you would invest  10,196  in Equitable Group on October 10, 2024 and sell it today you would earn a total of  411.00  from holding Equitable Group or generate 4.03% return on investment over 90 days.

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

Equitable Group  vs.  goeasy

Equitable Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Equitable is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

goeasy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Equitable and Goeasy

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

The idea behind Equitable Group and goeasy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.