Correlation Between Mastermind and Emerald Expositions

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

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

Diversification Opportunities for Mastermind and Emerald Expositions

0.17

Correlation Coefficient

Mastermind  Emerald Expositions

Average diversification

The 3 months correlation between Mastermind and Emerald is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mastermind and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions and Mastermind 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 Mastermind are associated (or correlated) with Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Mastermind i.e., Mastermind and Emerald Expositions go up and down completely randomly.

Pair Corralation between Mastermind and Emerald Expositions

Given the investment horizon of 90 days Mastermind is expected to generate 3.97 times more return on investment than Emerald Expositions. However, Mastermind is 3.97 times more volatile than Emerald Expositions Events. It trades about 0.08 of its potential returns per unit of risk. Emerald Expositions Events is currently generating about -0.04 per unit of risk. If you would invest  4.00  in Mastermind on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Mastermind or generate 25.0% return on investment over 90 days.

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

Mastermind  vs.  Emerald Expositions Events

Mastermind

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mastermind are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Mastermind exhibited solid returns over the last few months and may actually be approaching a breakup point.

Emerald Expositions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Expositions Events are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Emerald Expositions is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mastermind and Emerald Expositions

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

The idea behind Mastermind and Emerald Expositions Events 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.