Correlation Between Embassy Bancorp and Pioneer High

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

By analyzing existing cross correlation between Embassy Bancorp and Pioneer High Income, you can compare the effects of market volatilities on Embassy Bancorp and Pioneer High 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 Embassy Bancorp with a short position of Pioneer High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embassy Bancorp and Pioneer High.

Diversification Opportunities for Embassy Bancorp and Pioneer High

-0.65

Correlation Coefficient

Embassy Bancorp  Pioneer High

Excellent diversification

The 3 months correlation between Embassy and Pioneer is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Embassy Bancorp and Pioneer High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Income and Embassy Bancorp 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 Embassy Bancorp are associated (or correlated) with Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Income has no effect on the direction of Embassy Bancorp i.e., Embassy Bancorp and Pioneer High go up and down completely randomly.

Pair Corralation between Embassy Bancorp and Pioneer High

Given the investment horizon of 90 days Embassy Bancorp is expected to under-perform the Pioneer High. In addition to that, Embassy Bancorp is 2.13 times more volatile than Pioneer High Income. It trades about -0.04 of its total potential returns per unit of risk. Pioneer High Income is currently generating about -0.05 per unit of volatility. If you would invest  752.00  in Pioneer High Income on February 5, 2024 and sell it today you would lose (5.00) from holding Pioneer High Income or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Embassy Bancorp  vs.  Pioneer High Income

Embassy Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embassy Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pioneer High Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Pioneer High is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Embassy Bancorp and Pioneer High

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

The idea behind Embassy Bancorp and Pioneer High Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.