Correlation Between Associated Capital and Great Elm
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Great Elm 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 Associated Capital and Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Great Elm Capital, you can compare the effects of market volatilities on Associated Capital and Great Elm 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 Associated Capital with a short position of Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Great Elm.
Diversification Opportunities for Associated Capital and Great Elm
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Great is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and Associated Capital 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 Associated Capital Group are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Associated Capital i.e., Associated Capital and Great Elm go up and down completely randomly.
Pair Corralation between Associated Capital and Great Elm
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 2.86 times more return on investment than Great Elm. However, Associated Capital is 2.86 times more volatile than Great Elm Capital. It trades about 0.04 of its potential returns per unit of risk. Great Elm Capital is currently generating about 0.07 per unit of risk. If you would invest 3,195 in Associated Capital Group on September 2, 2024 and sell it today you would earn a total of 434.00 from holding Associated Capital Group or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Great Elm Capital
Performance |
| Timeline |
| Associated Capital |
| Great Elm Capital |
Associated Capital and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Great Elm
The main advantage of trading using opposite Associated Capital and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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