Correlation Between E L and Precious Metals
Can any of the company-specific risk be diversified away by investing in both E L and Precious Metals 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 Precious Metals 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 Precious Metals And, you can compare the effects of market volatilities on E L and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Precious Metals.
Diversification Opportunities for E L and Precious Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF and Precious is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of E L i.e., E L and Precious Metals go up and down completely randomly.
Pair Corralation between E L and Precious Metals
Assuming the 90 days trading horizon E L Financial Corp is expected to under-perform the Precious Metals. But the stock apears to be less risky and, when comparing its historical volatility, E L Financial Corp is 1.45 times less risky than Precious Metals. The stock trades about -0.2 of its potential returns per unit of risk. The Precious Metals And is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Precious Metals And on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Precious Metals And or generate 3.41% 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. Precious Metals And
Performance |
| Timeline |
| E L Financial |
| Precious Metals And |
E L and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Precious Metals
The main advantage of trading using opposite E L and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Precious Metals vs. Berkshire Hathaway CDR | Precious Metals vs. E L Financial Corp | Precious Metals vs. E L Financial 3 | Precious Metals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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