Correlation Between Emerald Banking and Stock Index

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Can any of the company-specific risk be diversified away by investing in both Emerald Banking and Stock Index 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 Stock Index 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 Stock Index Fund, you can compare the effects of market volatilities on Emerald Banking and Stock Index 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 Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Banking and Stock Index.

Diversification Opportunities for Emerald Banking and Stock Index

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Emerald and Stock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Banking And and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index Fund 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 Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of Emerald Banking i.e., Emerald Banking and Stock Index go up and down completely randomly.

Pair Corralation between Emerald Banking and Stock Index

Assuming the 90 days horizon Emerald Banking And is expected to generate 2.12 times more return on investment than Stock Index. However, Emerald Banking is 2.12 times more volatile than Stock Index Fund. It trades about 0.09 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.14 per unit of risk. If you would invest  1,907  in Emerald Banking And on October 8, 2024 and sell it today you would earn a total of  880.00  from holding Emerald Banking And or generate 46.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Emerald Banking And  vs.  Stock Index Fund

 Performance 
       Timeline  
Emerald Banking And 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Banking may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Stock Index Fund 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Stock Index Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Stock Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerald Banking and Stock Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerald Banking and Stock Index

The main advantage of trading using opposite Emerald Banking and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Banking position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index's long position.
The idea behind Emerald Banking And and Stock Index 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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