Correlation Between Evil Empire and Curtiss Motorcycles

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

By analyzing existing cross correlation between Evil Empire Designs and Curtiss Motorcycles, you can compare the effects of market volatilities on Evil Empire and Curtiss Motorcycles 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 Evil Empire with a short position of Curtiss Motorcycles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evil Empire and Curtiss Motorcycles.

Diversification Opportunities for Evil Empire and Curtiss Motorcycles

0.0

Correlation Coefficient

Evil Empire  Curtiss Motorcycles

Pay attention - limited upside

The 3 months correlation between Evil and Curtiss is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Evil Empire Designs and Curtiss Motorcycles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Motorcycles and Evil Empire 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 Evil Empire Designs are associated (or correlated) with Curtiss Motorcycles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Motorcycles has no effect on the direction of Evil Empire i.e., Evil Empire and Curtiss Motorcycles go up and down completely randomly.

Pair Corralation between Evil Empire and Curtiss Motorcycles

If you would invest  4.00  in Curtiss Motorcycles on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Curtiss Motorcycles or generate 25.0% return on investment over 90 days.

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

Evil Empire Designs  vs.  Curtiss Motorcycles

Evil Empire Designs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evil Empire Designs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Evil Empire is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Curtiss Motorcycles

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Motorcycles are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Curtiss Motorcycles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evil Empire and Curtiss Motorcycles

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

The idea behind Evil Empire Designs and Curtiss Motorcycles 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.