Correlation Between SWP Growth and Emerge Capital

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

By analyzing existing cross correlation between SWP Growth Income and Emerge Capital Management, you can compare the effects of market volatilities on SWP Growth and Emerge Capital 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 SWP Growth with a short position of Emerge Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and Emerge Capital.

Diversification Opportunities for SWP Growth and Emerge Capital

0.0

Correlation Coefficient

SWP Growth  Emerge Capital

Pay attention - limited upside

The 3 months correlation between SWP and Emerge is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income and Emerge Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerge Capital Management and SWP Growth 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 SWP Growth Income are associated (or correlated) with Emerge Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerge Capital Management has no effect on the direction of SWP Growth i.e., SWP Growth and Emerge Capital go up and down completely randomly.

Pair Corralation between SWP Growth and Emerge Capital

If you would invest (100.00) in Emerge Capital Management on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Emerge Capital Management or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SWP Growth Income  vs.  Emerge Capital Management

SWP Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWP Growth Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Emerge Capital Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerge Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Emerge Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SWP Growth and Emerge Capital

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

The idea behind SWP Growth Income and Emerge Capital Management 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.