Correlation Between Manchester United and Escalade Incorporated
Can any of the company-specific risk be diversified away by investing in both Manchester United 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 Manchester United and Escalade Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manchester United and Escalade Incorporated, you can compare the effects of market volatilities on Manchester United 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 Manchester United with a short position of Escalade Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manchester United and Escalade Incorporated.
Diversification Opportunities for Manchester United and Escalade Incorporated
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Manchester and Escalade is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Manchester United and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated and Manchester United 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 Manchester United 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 Manchester United i.e., Manchester United and Escalade Incorporated go up and down completely randomly.
Pair Corralation between Manchester United and Escalade Incorporated
Given the investment horizon of 90 days Manchester United is expected to generate 1.3 times more return on investment than Escalade Incorporated. However, Manchester United is 1.3 times more volatile than Escalade Incorporated. It trades about 0.04 of its potential returns per unit of risk. Escalade Incorporated is currently generating about 0.03 per unit of risk. If you would invest 1,106 in Manchester United on January 25, 2024 and sell it today you would earn a total of 473.00 from holding Manchester United or generate 42.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manchester United vs. Escalade Incorporated
Performance |
| Timeline |
| Manchester United |
| Escalade Incorporated |
Manchester United and Escalade Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manchester United and Escalade Incorporated
The main advantage of trading using opposite Manchester United and Escalade Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manchester United 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.| Manchester United vs. Roku Inc | Manchester United vs. Paramount Global Class | Manchester United vs. Warner Bros Discovery | Manchester United vs. Paramount Global Class |
| Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group | Escalade Incorporated vs. Eastern Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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