Correlation Between Equus Total and OFS Credit

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

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

Diversification Opportunities for Equus Total and OFS Credit

-0.61

Correlation Coefficient

Equus Total  OFS Credit

Excellent diversification

The 3 months correlation between Equus and OFS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Equus Total Return and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit and Equus Total 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 Equus Total Return are associated (or correlated) with OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Equus Total i.e., Equus Total and OFS Credit go up and down completely randomly.

Pair Corralation between Equus Total and OFS Credit

Considering the 90-day investment horizon Equus Total Return is expected to under-perform the OFS Credit. In addition to that, Equus Total is 6.51 times more volatile than OFS Credit. It trades about -0.04 of its total potential returns per unit of risk. OFS Credit is currently generating about 0.11 per unit of volatility. If you would invest  2,404  in OFS Credit on August 30, 2024 and sell it today you would earn a total of  74.00  from holding OFS Credit or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Equus Total Return  vs.  OFS Credit

Equus Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equus Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

OFS Credit

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OFS Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Equus Total and OFS Credit

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

The idea behind Equus Total Return and OFS Credit 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.