Correlation Between E I and Mosaic

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

By analyzing existing cross correlation between E I du and The Mosaic, you can compare the effects of market volatilities on E I and Mosaic 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 E I with a short position of Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of E I and Mosaic.

Diversification Opportunities for E I and Mosaic

0.45

Correlation Coefficient

E I  Mosaic

Very weak diversification

The 3 months correlation between CTA-PB and Mosaic is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding E I du and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic and E I 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 E I du are associated (or correlated) with Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of E I i.e., E I and Mosaic go up and down completely randomly.

Pair Corralation between E I and Mosaic

Assuming the 90 days trading horizon E I du is expected to generate 0.26 times more return on investment than Mosaic. However, E I du is 3.9 times less risky than Mosaic. It trades about 0.0 of its potential returns per unit of risk. The Mosaic is currently generating about -0.11 per unit of risk. If you would invest  7,041  in E I du on February 13, 2024 and sell it today you would lose (3.00) from holding E I du or give up 0.04% of portfolio value over 90 days.

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

E I du  vs.  The Mosaic

E I du

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in E I du are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, E I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with E I and Mosaic

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

The idea behind E I du and The Mosaic 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.