Correlation Between SEAS Old and Escalade Incorporated

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

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

Diversification Opportunities for SEAS Old and Escalade Incorporated

0.54

Correlation Coefficient

SEAS Old  Escalade Incorporated

Very weak diversification

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

Pair Corralation between SEAS Old and Escalade Incorporated

If you would invest  1,446  in Escalade Incorporated on October 25, 2024 and sell it today you would earn a total of  77.00  from holding Escalade Incorporated or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

SEAS Old  vs.  Escalade Incorporated

SEAS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEAS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SEAS Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Escalade Incorporated

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Escalade Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Escalade Incorporated sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEAS Old and Escalade Incorporated

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

The idea behind SEAS Old and Escalade Incorporated 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..