Correlation Between E L and Avanti Energy
Can any of the company-specific risk be diversified away by investing in both E L and Avanti Energy 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 Avanti Energy 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 Avanti Energy, you can compare the effects of market volatilities on E L and Avanti Energy 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 Avanti Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Avanti Energy.
Diversification Opportunities for E L and Avanti Energy
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF and Avanti is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Avanti Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanti Energy 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 Avanti Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanti Energy has no effect on the direction of E L i.e., E L and Avanti Energy go up and down completely randomly.
Pair Corralation between E L and Avanti Energy
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.25 times more return on investment than Avanti Energy. However, E L Financial Corp is 4.04 times less risky than Avanti Energy. It trades about 0.21 of its potential returns per unit of risk. Avanti Energy is currently generating about -0.1 per unit of risk. If you would invest 129,425 in E L Financial Corp on August 26, 2024 and sell it today you would earn a total of 18,075 from holding E L Financial Corp or generate 13.97% 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. Avanti Energy
Performance |
| Timeline |
| E L Financial |
| Avanti Energy |
E L and Avanti Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Avanti Energy
The main advantage of trading using opposite E L and Avanti Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Avanti Energy 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 Avanti Energy will offset losses from the drop in Avanti Energy's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Avanti Energy vs. Royal Helium | Avanti Energy vs. Desert Mountain Energy | Avanti Energy vs. First Helium | Avanti Energy vs. Headwater Exploration |
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 Directory module to find actively traded commodities issued by global exchanges.
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