Correlation Between Element Fleet and Transalta
Can any of the company-specific risk be diversified away by investing in both Element Fleet and Transalta 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 Transalta 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 Transalta A Cum, you can compare the effects of market volatilities on Element Fleet and Transalta 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 Transalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Transalta.
Diversification Opportunities for Element Fleet and Transalta
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Element and Transalta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Transalta A Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transalta A Cum 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 Transalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transalta A Cum has no effect on the direction of Element Fleet i.e., Element Fleet and Transalta go up and down completely randomly.
Pair Corralation between Element Fleet and Transalta
Assuming the 90 days trading horizon Element Fleet Management is expected to generate 1.21 times more return on investment than Transalta. However, Element Fleet is 1.21 times more volatile than Transalta A Cum. It trades about 0.11 of its potential returns per unit of risk. Transalta A Cum is currently generating about 0.13 per unit of risk. If you would invest 2,084 in Element Fleet Management on September 14, 2024 and sell it today you would earn a total of 813.00 from holding Element Fleet Management or generate 39.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Fleet Management vs. Transalta A Cum
Performance |
| Timeline |
| Element Fleet Management |
| Transalta A Cum |
Element Fleet and Transalta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and Transalta
The main advantage of trading using opposite Element Fleet and Transalta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, Transalta 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 Transalta will offset losses from the drop in Transalta's long position.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| Transalta vs. NeXGold Mining Corp | Transalta vs. Aya Gold Silver | Transalta vs. Metalero Mining Corp | Transalta vs. Sangoma Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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