Correlation Between Element Fleet and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Element Fleet and ECN Capital 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 Element Fleet and ECN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Fleet Management and ECN Capital Corp, you can compare the effects of market volatilities on Element Fleet and ECN Capital 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 Element Fleet with a short position of ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and ECN Capital.
Diversification Opportunities for Element Fleet and ECN Capital
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Element and ECN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp and Element Fleet 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 Element Fleet Management are associated (or correlated) with ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Element Fleet i.e., Element Fleet and ECN Capital go up and down completely randomly.
Pair Corralation between Element Fleet and ECN Capital
Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.38 times more return on investment than ECN Capital. However, Element Fleet Management is 2.63 times less risky than ECN Capital. It trades about 0.08 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.02 per unit of risk. If you would invest 1,818 in Element Fleet Management on August 24, 2024 and sell it today you would earn a total of 1,143 from holding Element Fleet Management or generate 62.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Fleet Management vs. ECN Capital Corp
Performance |
| Timeline |
| Element Fleet Management |
| ECN Capital Corp |
Element Fleet and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and ECN Capital
The main advantage of trading using opposite Element Fleet and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital's long position.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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