Correlation Between Sage Group and Everyman Media

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

By analyzing existing cross correlation between Sage Group PLC and Everyman Media Group, you can compare the effects of market volatilities on Sage Group and Everyman Media 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 Sage Group with a short position of Everyman Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Everyman Media.

Diversification Opportunities for Sage Group and Everyman Media

-0.28

Correlation Coefficient

Sage Group  Everyman Media

Very good diversification

The 3 months correlation between Sage and Everyman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Everyman Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyman Media Group and Sage Group 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 Sage Group PLC are associated (or correlated) with Everyman Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyman Media Group has no effect on the direction of Sage Group i.e., Sage Group and Everyman Media go up and down completely randomly.

Pair Corralation between Sage Group and Everyman Media

Assuming the 90 days trading horizon Sage Group PLC is expected to generate 0.21 times more return on investment than Everyman Media. However, Sage Group PLC is 4.71 times less risky than Everyman Media. It trades about 0.26 of its potential returns per unit of risk. Everyman Media Group is currently generating about -0.27 per unit of risk. If you would invest  127,569  in Sage Group PLC on October 23, 2024 and sell it today you would earn a total of  4,581  from holding Sage Group PLC or generate 3.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Sage Group PLC  vs.  Everyman Media Group

Sage Group PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sage Group PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sage Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Everyman Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everyman Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sage Group and Everyman Media

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

The idea behind Sage Group PLC and Everyman Media Group 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..