Correlation Between Eve Holding and Ducommun Incorporated

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

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

Diversification Opportunities for Eve Holding and Ducommun Incorporated

-0.26

Correlation Coefficient

Eve Holding  Ducommun Incorporated

Very good diversification

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

Pair Corralation between Eve Holding and Ducommun Incorporated

Given the investment horizon of 90 days Eve Holding is expected to generate 1.32 times more return on investment than Ducommun Incorporated. However, Eve Holding is 1.32 times more volatile than Ducommun Incorporated. It trades about 0.37 of its potential returns per unit of risk. Ducommun Incorporated is currently generating about -0.08 per unit of risk. If you would invest  429.00  in Eve Holding on October 6, 2024 and sell it today you would earn a total of  133.00  from holding Eve Holding or generate 31.0% return on investment over 90 days.

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

Eve Holding  vs.  Ducommun Incorporated

Eve Holding

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Ducommun Incorporated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ducommun Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eve Holding and Ducommun Incorporated

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

The idea behind Eve Holding and Ducommun Incorporated 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.