Correlation Between E L and Charlottes Web
Can any of the company-specific risk be diversified away by investing in both E L and Charlottes Web 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 Charlottes Web 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 Charlottes Web Holdings, you can compare the effects of market volatilities on E L and Charlottes Web 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 Charlottes Web. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Charlottes Web.
Diversification Opportunities for E L and Charlottes Web
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF-PH and Charlottes is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings 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 Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of E L i.e., E L and Charlottes Web go up and down completely randomly.
Pair Corralation between E L and Charlottes Web
Assuming the 90 days trading horizon E L Financial 3 is expected to generate 0.11 times more return on investment than Charlottes Web. However, E L Financial 3 is 8.77 times less risky than Charlottes Web. It trades about 0.08 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about -0.01 per unit of risk. If you would invest 2,098 in E L Financial 3 on August 27, 2024 and sell it today you would earn a total of 127.00 from holding E L Financial 3 or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial 3 vs. Charlottes Web Holdings
Performance |
| Timeline |
| E L Financial |
| Charlottes Web Holdings |
E L and Charlottes Web Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Charlottes Web
The main advantage of trading using opposite E L and Charlottes Web positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Charlottes Web 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 Charlottes Web will offset losses from the drop in Charlottes Web's long position.| E L vs. Nicola Mining | E L vs. Faction Investment Group | E L vs. Mako Mining Corp | E L vs. Cogeco Communications |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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