Correlation Between Transcontinental and Elis SA
Can any of the company-specific risk be diversified away by investing in both Transcontinental and Elis SA 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 Transcontinental and Elis SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcontinental and Elis SA, you can compare the effects of market volatilities on Transcontinental and Elis SA 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 Transcontinental with a short position of Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Elis SA.
Diversification Opportunities for Transcontinental and Elis SA
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transcontinental and Elis is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and Transcontinental 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 Transcontinental are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Transcontinental i.e., Transcontinental and Elis SA go up and down completely randomly.
Pair Corralation between Transcontinental and Elis SA
Assuming the 90 days horizon Transcontinental is expected to generate 0.77 times more return on investment than Elis SA. However, Transcontinental is 1.3 times less risky than Elis SA. It trades about 0.07 of its potential returns per unit of risk. Elis SA is currently generating about -0.18 per unit of risk. If you would invest 1,120 in Transcontinental on September 23, 2024 and sell it today you would earn a total of 40.00 from holding Transcontinental or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcontinental vs. Elis SA
Performance |
| Timeline |
| Transcontinental |
| Elis SA |
Transcontinental and Elis SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcontinental and Elis SA
The main advantage of trading using opposite Transcontinental and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcontinental position performs unexpectedly, Elis SA 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 Elis SA will offset losses from the drop in Elis SA's long position.| Transcontinental vs. Cintas | Transcontinental vs. RENTOKIL INITIAL ADR5 | Transcontinental vs. INPOST SA EO | Transcontinental vs. Elis SA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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