Correlation Between Electreon Wireless and Pool

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

By analyzing existing cross correlation between Electreon Wireless and Pool Corporation, you can compare the effects of market volatilities on Electreon Wireless and Pool 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 Electreon Wireless with a short position of Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electreon Wireless and Pool.

Diversification Opportunities for Electreon Wireless and Pool

0.07

Correlation Coefficient

Electreon Wireless  Pool

Significant diversification

The 3 months correlation between Electreon and Pool is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool and Electreon Wireless 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 Electreon Wireless are associated (or correlated) with Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and Pool go up and down completely randomly.

Pair Corralation between Electreon Wireless and Pool

Assuming the 90 days horizon Electreon Wireless is expected to under-perform the Pool. In addition to that, Electreon Wireless is 1.56 times more volatile than Pool Corporation. It trades about -0.11 of its total potential returns per unit of risk. Pool Corporation is currently generating about 0.01 per unit of volatility. If you would invest  34,121  in Pool Corporation on June 9, 2024 and sell it today you would earn a total of  16.00  from holding Pool Corporation or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Electreon Wireless  vs.  Pool Corp.

Electreon Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electreon Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pool

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Electreon Wireless and Pool

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

The idea behind Electreon Wireless and Pool Corporation 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.