Correlation Between E L and Canso Select
Can any of the company-specific risk be diversified away by investing in both E L and Canso Select 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 Canso Select 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 Canso Select Opportunities, you can compare the effects of market volatilities on E L and Canso Select 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 Canso Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Canso Select.
Diversification Opportunities for E L and Canso Select
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ELF and Canso is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Canso Select Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Select Opportu 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 Canso Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Select Opportu has no effect on the direction of E L i.e., E L and Canso Select go up and down completely randomly.
Pair Corralation between E L and Canso Select
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.39 times more return on investment than Canso Select. However, E L Financial Corp is 2.59 times less risky than Canso Select. It trades about 0.1 of its potential returns per unit of risk. Canso Select Opportunities is currently generating about 0.02 per unit of risk. If you would invest 82,894 in E L Financial Corp on September 16, 2024 and sell it today you would earn a total of 55,906 from holding E L Financial Corp or generate 67.44% return on investment 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. Canso Select Opportunities
Performance |
| Timeline |
| E L Financial |
| Canso Select Opportu |
E L and Canso Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Canso Select
The main advantage of trading using opposite E L and Canso Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Canso Select 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 Canso Select will offset losses from the drop in Canso Select's long position.The idea behind E L Financial Corp and Canso Select Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canso Select vs. Berkshire Hathaway CDR | Canso Select vs. E L Financial Corp | Canso Select vs. E L Financial 3 | Canso Select vs. Molson Coors Canada |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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