Correlation Between Tidewater and First Eagle
Can any of the company-specific risk be diversified away by investing in both Tidewater and First Eagle 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 Tidewater and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidewater and First Eagle High, you can compare the effects of market volatilities on Tidewater and First Eagle 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 Tidewater with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidewater and First Eagle.
Diversification Opportunities for Tidewater and First Eagle
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tidewater and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and First Eagle High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle High and Tidewater 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 Tidewater are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle High has no effect on the direction of Tidewater i.e., Tidewater and First Eagle go up and down completely randomly.
Pair Corralation between Tidewater and First Eagle
Considering the 90-day investment horizon Tidewater is expected to generate 10.28 times more return on investment than First Eagle. However, Tidewater is 10.28 times more volatile than First Eagle High. It trades about 0.11 of its potential returns per unit of risk. First Eagle High is currently generating about 0.07 per unit of risk. If you would invest 2,155 in Tidewater on January 26, 2024 and sell it today you would earn a total of 7,112 from holding Tidewater or generate 330.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Tidewater vs. First Eagle High
Performance |
Timeline |
Tidewater |
First Eagle High |
Tidewater and First Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tidewater and First Eagle
The main advantage of trading using opposite Tidewater and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidewater position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.Tidewater vs. Oil States International | Tidewater vs. Geospace Technologies | Tidewater vs. Weatherford International PLC | Tidewater vs. Enerflex |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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