Correlation Between E L and Jade Leader
Can any of the company-specific risk be diversified away by investing in both E L and Jade Leader 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 Jade Leader 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 Jade Leader Corp, you can compare the effects of market volatilities on E L and Jade Leader 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 Jade Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Jade Leader.
Diversification Opportunities for E L and Jade Leader
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF and Jade is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Jade Leader Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Leader Corp 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 Jade Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Leader Corp has no effect on the direction of E L i.e., E L and Jade Leader go up and down completely randomly.
Pair Corralation between E L and Jade Leader
Assuming the 90 days trading horizon E L is expected to generate 12.67 times less return on investment than Jade Leader. But when comparing it to its historical volatility, E L Financial Corp is 7.71 times less risky than Jade Leader. It trades about 0.09 of its potential returns per unit of risk. Jade Leader Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Jade Leader Corp on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Jade Leader Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. Jade Leader Corp
Performance |
| Timeline |
| E L Financial |
| Jade Leader Corp |
E L and Jade Leader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Jade Leader
The main advantage of trading using opposite E L and Jade Leader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Jade Leader 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 Jade Leader will offset losses from the drop in Jade Leader's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Jade Leader vs. 2028 Investment Grade | Jade Leader vs. Maple Peak Investments | Jade Leader vs. Brookfield Asset Management | Jade Leader vs. Costco Wholesale Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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