Correlation Between E L and Avicanna
Can any of the company-specific risk be diversified away by investing in both E L and Avicanna 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 Avicanna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial Corp and Avicanna, you can compare the effects of market volatilities on E L and Avicanna 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 Avicanna. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Avicanna.
Diversification Opportunities for E L and Avicanna
Excellent diversification
The 3 months correlation between ELF and Avicanna is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna 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 Corp are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of E L i.e., E L and Avicanna go up and down completely randomly.
Pair Corralation between E L and Avicanna
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.19 times more return on investment than Avicanna. However, E L Financial Corp is 5.34 times less risky than Avicanna. It trades about 0.18 of its potential returns per unit of risk. Avicanna is currently generating about -0.01 per unit of risk. If you would invest 97,112 in E L Financial Corp on August 27, 2024 and sell it today you would earn a total of 50,388 from holding E L Financial Corp or generate 51.89% 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 Corp vs. Avicanna
Performance |
| Timeline |
| E L Financial |
| Avicanna |
E L and Avicanna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Avicanna
The main advantage of trading using opposite E L and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Avicanna 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 Avicanna will offset losses from the drop in Avicanna's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Avicanna vs. Auxly Cannabis Group | Avicanna vs. Entourage Health Corp | Avicanna vs. iShares Canadian HYBrid | Avicanna vs. Altagas Cum Red |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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