Correlation Between E L and Big Rock
Can any of the company-specific risk be diversified away by investing in both E L and Big Rock 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 E L and Big Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial 3 and Big Rock Brewery, you can compare the effects of market volatilities on E L and Big Rock 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 E L with a short position of Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Big Rock.
Diversification Opportunities for E L and Big Rock
Weak diversification
The 3 months correlation between ELF-PH and Big is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery and E L 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 E L Financial 3 are associated (or correlated) with Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of E L i.e., E L and Big Rock go up and down completely randomly.
Pair Corralation between E L and Big Rock
Assuming the 90 days trading horizon E L Financial 3 is expected to generate 0.07 times more return on investment than Big Rock. However, E L Financial 3 is 14.01 times less risky than Big Rock. It trades about -0.07 of its potential returns per unit of risk. Big Rock Brewery is currently generating about -0.07 per unit of risk. If you would invest 2,325 in E L Financial 3 on December 24, 2024 and sell it today you would lose (13.00) from holding E L Financial 3 or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial 3 vs. Big Rock Brewery
Performance |
| Timeline |
| E L Financial |
| Big Rock Brewery |
E L and Big Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Big Rock
The main advantage of trading using opposite E L and Big Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Big Rock 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 Big Rock will offset losses from the drop in Big Rock's long position.| E L vs. Upstart Investments | E L vs. Costco Wholesale Corp | E L vs. Atrium Mortgage Investment | E L vs. Highwood Asset Management |
| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |