Correlation Between Economic Investment and Hawkeye Gold

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

By analyzing existing cross correlation between Economic Investment Trust and Hawkeye Gold and, you can compare the effects of market volatilities on Economic Investment and Hawkeye Gold 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 Economic Investment with a short position of Hawkeye Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Hawkeye Gold.

Diversification Opportunities for Economic Investment and Hawkeye Gold

-0.54

Correlation Coefficient

Economic Investment  Hawkeye Gold

Excellent diversification

The 3 months correlation between Economic and Hawkeye is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Hawkeye Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkeye Gold and Economic Investment 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 Economic Investment Trust are associated (or correlated) with Hawkeye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkeye Gold has no effect on the direction of Economic Investment i.e., Economic Investment and Hawkeye Gold go up and down completely randomly.

Pair Corralation between Economic Investment and Hawkeye Gold

Assuming the 90 days trading horizon Economic Investment Trust is expected to under-perform the Hawkeye Gold. But the stock apears to be less risky and, when comparing its historical volatility, Economic Investment Trust is 5.73 times less risky than Hawkeye Gold. The stock trades about -0.27 of its potential returns per unit of risk. The Hawkeye Gold and is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Hawkeye Gold and on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Hawkeye Gold and or generate 25.0% return on investment over 90 days.

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

Economic Investment Trust  vs.  Hawkeye Gold and

Economic Investment Trust

Risk-Adjusted Performance

2 of 100

Modest

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

Hawkeye Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkeye Gold and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hawkeye Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Economic Investment and Hawkeye Gold

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

The idea behind Economic Investment Trust and Hawkeye Gold and 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.