Correlation Between E L and Comprehensive Healthcare
Can any of the company-specific risk be diversified away by investing in both E L and Comprehensive Healthcare 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 Comprehensive Healthcare 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 Comprehensive Healthcare Systems, you can compare the effects of market volatilities on E L and Comprehensive Healthcare 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 Comprehensive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Comprehensive Healthcare.
Diversification Opportunities for E L and Comprehensive Healthcare
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ELF and Comprehensive is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Comprehensive Healthcare Syste in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comprehensive Healthcare 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 Comprehensive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comprehensive Healthcare has no effect on the direction of E L i.e., E L and Comprehensive Healthcare go up and down completely randomly.
Pair Corralation between E L and Comprehensive Healthcare
Assuming the 90 days trading horizon E L is expected to generate 3.01 times less return on investment than Comprehensive Healthcare. But when comparing it to its historical volatility, E L Financial Corp is 11.57 times less risky than Comprehensive Healthcare. It trades about 0.18 of its potential returns per unit of risk. Comprehensive Healthcare Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Comprehensive Healthcare Systems on September 3, 2024 and sell it today you would lose (0.50) from holding Comprehensive Healthcare Systems or give up 33.33% 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 Corp vs. Comprehensive Healthcare Syste
Performance |
| Timeline |
| E L Financial |
| Comprehensive Healthcare |
E L and Comprehensive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Comprehensive Healthcare
The main advantage of trading using opposite E L and Comprehensive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Comprehensive Healthcare 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 Comprehensive Healthcare will offset losses from the drop in Comprehensive Healthcare's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Comprehensive Healthcare vs. Westaim Corp | Comprehensive Healthcare vs. Pulse Seismic | Comprehensive Healthcare vs. Quarterhill | Comprehensive Healthcare vs. TECSYS Inc |
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.
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