Correlation Between Endymed and Target
Can any of the company-specific risk be diversified away by investing in both Endymed and Target 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 Endymed and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endymed and Target, you can compare the effects of market volatilities on Endymed and Target 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 Endymed with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endymed and Target.
Diversification Opportunities for Endymed and Target
Pay attention - limited upside
The 3 months correlation between Endymed and Target is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Endymed and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Endymed 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 Endymed are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Endymed i.e., Endymed and Target go up and down completely randomly.
Pair Corralation between Endymed and Target
If you would invest 14,137 in Target on December 29, 2023 and sell it today you would earn a total of 3,584 from holding Target or generate 25.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 1.61% |
Values | Daily Returns |
Endymed vs. Target
Performance |
Timeline |
Endymed |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Target |
Endymed and Target Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Endymed and Target
The main advantage of trading using opposite Endymed and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endymed position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.The idea behind Endymed and Target 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.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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