Correlation Between Dogness International and Escalade Incorporated

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

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

Diversification Opportunities for Dogness International and Escalade Incorporated

-0.77

Correlation Coefficient

Dogness International  Escalade Incorporated

Pay attention - limited upside

The 3 months correlation between Dogness and Escalade is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dogness International Corp and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated and Dogness International 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 Dogness International Corp are associated (or correlated) with Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of Dogness International i.e., Dogness International and Escalade Incorporated go up and down completely randomly.

Pair Corralation between Dogness International and Escalade Incorporated

Given the investment horizon of 90 days Dogness International Corp is expected to generate 3.74 times more return on investment than Escalade Incorporated. However, Dogness International is 3.74 times more volatile than Escalade Incorporated. It trades about 0.07 of its potential returns per unit of risk. Escalade Incorporated is currently generating about -0.12 per unit of risk. If you would invest  519.00  in Dogness International Corp on February 7, 2024 and sell it today you would earn a total of  68.00  from holding Dogness International Corp or generate 13.1% return on investment over 90 days.

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

Dogness International Corp  vs.  Escalade Incorporated

Dogness International

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dogness International Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Dogness International showed solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain 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.

Pair Trading with Dogness International and Escalade Incorporated

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

The idea behind Dogness International Corp and Escalade Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.