Correlation Between Escalade Incorporated and Drive Shack

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

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

Diversification Opportunities for Escalade Incorporated and Drive Shack

0.66

Correlation Coefficient

Escalade Incorporated  Drive Shack

Poor diversification

The 3 months correlation between Escalade and Drive is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and Drive Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drive Shack and Escalade Incorporated 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 Escalade Incorporated are associated (or correlated) with Drive Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drive Shack has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and Drive Shack go up and down completely randomly.

Pair Corralation between Escalade Incorporated and Drive Shack

If you would invest  1,307  in Escalade Incorporated on February 5, 2024 and sell it today you would earn a total of  22.00  from holding Escalade Incorporated or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Escalade Incorporated  vs.  Drive Shack

Escalade Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Escalade Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Drive Shack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drive Shack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Drive Shack is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Escalade Incorporated and Drive Shack

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

The idea behind Escalade Incorporated and Drive Shack 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 CEOs Directory module to screen CEOs from public companies around the world.