Correlation Between Element Fleet and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Element Fleet and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on Element Fleet and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Westport Fuel.
Diversification Opportunities for Element Fleet and Westport Fuel
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Element and Westport is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Element Fleet i.e., Element Fleet and Westport Fuel go up and down completely randomly.
Pair Corralation between Element Fleet and Westport Fuel
Assuming the 90 days trading horizon Element Fleet is expected to generate 1.39 times less return on investment than Westport Fuel. But when comparing it to its historical volatility, Element Fleet Management is 1.16 times less risky than Westport Fuel. It trades about 0.11 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 593.00 in Westport Fuel Systems on August 29, 2024 and sell it today you would earn a total of 34.00 from holding Westport Fuel Systems or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Fleet Management vs. Westport Fuel Systems
Performance |
| Timeline |
| Element Fleet Management |
| Westport Fuel Systems |
Element Fleet and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and Westport Fuel
The main advantage of trading using opposite Element Fleet and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| Westport Fuel vs. Eros Resources Corp | Westport Fuel vs. Apple Inc CDR | Westport Fuel vs. European Residential Real | Westport Fuel vs. Canadian Utilities Ltd |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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