Correlation Between Workforce Holdings and E Media
Can any of the company-specific risk be diversified away by investing in both Workforce Holdings and E 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 Workforce Holdings and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workforce Holdings and E Media Holdings, you can compare the effects of market volatilities on Workforce Holdings and E 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 Workforce Holdings with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workforce Holdings and E Media.
Diversification Opportunities for Workforce Holdings and E Media
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Workforce and EMH is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Workforce Holdings and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and Workforce Holdings 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 Workforce Holdings are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of Workforce Holdings i.e., Workforce Holdings and E Media go up and down completely randomly.
Pair Corralation between Workforce Holdings and E Media
Assuming the 90 days trading horizon Workforce Holdings is expected to generate 4.7 times less return on investment than E Media. But when comparing it to its historical volatility, Workforce Holdings is 10.64 times less risky than E Media. It trades about 0.23 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 34,400 in E Media Holdings on September 24, 2024 and sell it today you would earn a total of 1,100 from holding E Media Holdings or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
Workforce Holdings vs. E Media Holdings
Performance |
Timeline |
Workforce Holdings |
E Media Holdings |
Workforce Holdings and E Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Workforce Holdings and E Media
The main advantage of trading using opposite Workforce Holdings and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workforce Holdings position performs unexpectedly, E 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 E Media will offset losses from the drop in E Media's long position.Workforce Holdings vs. Ascendis Health | Workforce Holdings vs. Frontier Transport Holdings | Workforce Holdings vs. E Media Holdings | Workforce Holdings vs. Copper 360 |
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Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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