Correlation Between EROAD and Garda Diversified

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

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

Diversification Opportunities for EROAD and Garda Diversified

-0.26

Correlation Coefficient

EROAD  Garda Diversified

Very good diversification

The 3 months correlation between EROAD and Garda is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Garda Diversified Ppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Diversified Ppty and EROAD 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 EROAD are associated (or correlated) with Garda Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Diversified Ppty has no effect on the direction of EROAD i.e., EROAD and Garda Diversified go up and down completely randomly.

Pair Corralation between EROAD and Garda Diversified

Assuming the 90 days trading horizon EROAD is expected to generate 4.22 times more return on investment than Garda Diversified. However, EROAD is 4.22 times more volatile than Garda Diversified Ppty. It trades about 0.25 of its potential returns per unit of risk. Garda Diversified Ppty is currently generating about -0.25 per unit of risk. If you would invest  85.00  in EROAD on October 6, 2024 and sell it today you would earn a total of  15.00  from holding EROAD or generate 17.65% return on investment over 90 days.

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

EROAD  vs.  Garda Diversified Ppty

EROAD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EROAD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, EROAD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Garda Diversified Ppty

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garda Diversified Ppty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Garda Diversified is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EROAD and Garda Diversified

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

The idea behind EROAD and Garda Diversified Ppty 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.