Correlation Between Element Fleet and Martinrea International
Can any of the company-specific risk be diversified away by investing in both Element Fleet and Martinrea International 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 Martinrea International 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 Martinrea International, you can compare the effects of market volatilities on Element Fleet and Martinrea International 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 Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Martinrea International.
Diversification Opportunities for Element Fleet and Martinrea International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Element and Martinrea is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International 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 Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Element Fleet i.e., Element Fleet and Martinrea International go up and down completely randomly.
Pair Corralation between Element Fleet and Martinrea International
Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.66 times more return on investment than Martinrea International. However, Element Fleet Management is 1.52 times less risky than Martinrea International. It trades about 0.09 of its potential returns per unit of risk. Martinrea International is currently generating about 0.0 per unit of risk. If you would invest 1,789 in Element Fleet Management on August 28, 2024 and sell it today you would earn a total of 1,227 from holding Element Fleet Management or generate 68.59% 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. Martinrea International
Performance |
| Timeline |
| Element Fleet Management |
| Martinrea International |
Element Fleet and Martinrea International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and Martinrea International
The main advantage of trading using opposite Element Fleet and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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