Correlation Between Cimpress and Emerald Expositions

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

By analyzing existing cross correlation between Cimpress NV and Emerald Expositions Events, you can compare the effects of market volatilities on Cimpress and Emerald Expositions 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 Cimpress with a short position of Emerald Expositions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cimpress and Emerald Expositions.

Diversification Opportunities for Cimpress and Emerald Expositions

0.62

Correlation Coefficient

Cimpress  Emerald Expositions

Poor diversification

The 3 months correlation between Cimpress and Emerald is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions and Cimpress 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 Cimpress NV are associated (or correlated) with Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Cimpress i.e., Cimpress and Emerald Expositions go up and down completely randomly.

Pair Corralation between Cimpress and Emerald Expositions

Given the investment horizon of 90 days Cimpress NV is expected to generate 0.59 times more return on investment than Emerald Expositions. However, Cimpress NV is 1.71 times less risky than Emerald Expositions. It trades about 0.0 of its potential returns per unit of risk. Emerald Expositions Events is currently generating about -0.03 per unit of risk. If you would invest  8,284  in Cimpress NV on August 9, 2024 and sell it today you would lose (196.00) from holding Cimpress NV or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cimpress NV  vs.  Emerald Expositions Events

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerald Expositions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerald Expositions Events has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cimpress and Emerald Expositions

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

The idea behind Cimpress NV and Emerald Expositions Events 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.