Correlation Between Homeco Daily and EP Financial
Can any of the company-specific risk be diversified away by investing in both Homeco Daily and EP Financial 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 Homeco Daily and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homeco Daily NeedsReit and EP Financial Group, you can compare the effects of market volatilities on Homeco Daily and EP Financial 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 Homeco Daily with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homeco Daily and EP Financial.
Diversification Opportunities for Homeco Daily and EP Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Homeco and EP1 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Homeco Daily NeedsReit and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Homeco Daily 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 Homeco Daily NeedsReit are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Homeco Daily i.e., Homeco Daily and EP Financial go up and down completely randomly.
Pair Corralation between Homeco Daily and EP Financial
Assuming the 90 days trading horizon Homeco Daily NeedsReit is expected to generate 0.58 times more return on investment than EP Financial. However, Homeco Daily NeedsReit is 1.72 times less risky than EP Financial. It trades about 0.0 of its potential returns per unit of risk. EP Financial Group is currently generating about -0.14 per unit of risk. If you would invest 126.00 in Homeco Daily NeedsReit on February 28, 2024 and sell it today you would lose (1.00) from holding Homeco Daily NeedsReit or give up 0.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.5% |
Values | Daily Returns |
Homeco Daily NeedsReit vs. EP Financial Group
Performance |
Timeline |
Homeco Daily NeedsReit |
EP Financial Group |
Homeco Daily and EP Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Homeco Daily and EP Financial
The main advantage of trading using opposite Homeco Daily and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeco Daily position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.Homeco Daily vs. Vicinity Centres Re | Homeco Daily vs. Charter Hall Retail | Homeco Daily vs. Carindale Property Trust | Homeco Daily vs. GDI Property Group |
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Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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