Correlation Between Emerald Banking and Emerald Insights

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

By analyzing existing cross correlation between Emerald Banking And and Emerald Insights Fund, you can compare the effects of market volatilities on Emerald Banking and Emerald Insights 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 Emerald Banking with a short position of Emerald Insights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Banking and Emerald Insights.

Diversification Opportunities for Emerald Banking and Emerald Insights

0.92

Correlation Coefficient

Emerald Banking  Emerald Insights

Almost no diversification

The 3 months correlation between Emerald and Emerald is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Banking And and Emerald Insights Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Insights and Emerald Banking 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 Emerald Banking And are associated (or correlated) with Emerald Insights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Insights has no effect on the direction of Emerald Banking i.e., Emerald Banking and Emerald Insights go up and down completely randomly.

Pair Corralation between Emerald Banking and Emerald Insights

Assuming the 90 days horizon Emerald Banking And is expected to under-perform the Emerald Insights. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerald Banking And is 1.01 times less risky than Emerald Insights. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Emerald Insights Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,140  in Emerald Insights Fund on September 13, 2024 and sell it today you would earn a total of  51.00  from holding Emerald Insights Fund or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Emerald Banking And  vs.  Emerald Insights Fund

Emerald Banking And

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Banking showed solid returns over the last few months and may actually be approaching a breakup point.

Emerald Insights

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Insights Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Insights may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Emerald Banking and Emerald Insights

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

The idea behind Emerald Banking And and Emerald Insights Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .