Correlation Between Newage and Elspec
Can any of the company-specific risk be diversified away by investing in both Newage and Elspec 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 Newage and Elspec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newage Inc and Elspec, you can compare the effects of market volatilities on Newage and Elspec 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 Newage with a short position of Elspec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newage and Elspec.
Diversification Opportunities for Newage and Elspec
Very good diversification
The 3 months correlation between Newage and Elspec is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Newage Inc and Elspec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elspec and Newage 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 Newage Inc are associated (or correlated) with Elspec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elspec has no effect on the direction of Newage i.e., Newage and Elspec go up and down completely randomly.
Pair Corralation between Newage and Elspec
Given the investment horizon of 90 days Newage Inc is expected to generate 33.9 times more return on investment than Elspec. However, Newage is 33.9 times more volatile than Elspec. It trades about 0.15 of its potential returns per unit of risk. Elspec is currently generating about 0.06 per unit of risk. If you would invest 42.00 in Newage Inc on January 24, 2024 and sell it today you would lose (41.50) from holding Newage Inc or give up 98.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.1% |
| Values | Daily Returns |
Newage Inc vs. Elspec
Performance |
| Timeline |
| Newage Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Elspec |
Newage and Elspec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newage and Elspec
The main advantage of trading using opposite Newage and Elspec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newage position performs unexpectedly, Elspec 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 Elspec will offset losses from the drop in Elspec's long position.| Newage vs. ZK International Group | Newage vs. Cimpress NV | Newage vs. WPP PLC ADR | Newage vs. Dolphin Entertainment |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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