Correlation Between Escalade Incorporated and MCBC Holdings

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

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

Diversification Opportunities for Escalade Incorporated and MCBC Holdings

0.81

Correlation Coefficient

Escalade Incorporated  MCBC Holdings

Very poor diversification

The 3 months correlation between Escalade and MCBC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and MCBC Holdings go up and down completely randomly.

Pair Corralation between Escalade Incorporated and MCBC Holdings

Given the investment horizon of 90 days Escalade Incorporated is expected to generate 1.72 times more return on investment than MCBC Holdings. However, Escalade Incorporated is 1.72 times more volatile than MCBC Holdings. It trades about -0.09 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.48 per unit of risk. If you would invest  1,556  in Escalade Incorporated on September 26, 2024 and sell it today you would lose (95.00) from holding Escalade Incorporated or give up 6.11% of portfolio value over 90 days.

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

Escalade Incorporated  vs.  MCBC Holdings

Escalade Incorporated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Escalade Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Escalade Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MCBC Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Escalade Incorporated and MCBC Holdings

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

The idea behind Escalade Incorporated and MCBC Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.