Correlation Between E L and NuVista Energy
Can any of the company-specific risk be diversified away by investing in both E L and NuVista 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 NuVista 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 NuVista Energy, you can compare the effects of market volatilities on E L and NuVista 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 NuVista Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and NuVista Energy.
Diversification Opportunities for E L and NuVista Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELF and NuVista is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista 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 NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of E L i.e., E L and NuVista Energy go up and down completely randomly.
Pair Corralation between E L and NuVista Energy
Assuming the 90 days trading horizon E L is expected to generate 1.61 times less return on investment than NuVista Energy. But when comparing it to its historical volatility, E L Financial Corp is 1.19 times less risky than NuVista Energy. It trades about 0.26 of its potential returns per unit of risk. NuVista Energy is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,122 in NuVista Energy on August 31, 2024 and sell it today you would earn a total of 228.00 from holding NuVista Energy or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. NuVista Energy
Performance |
| Timeline |
| E L Financial |
| NuVista Energy |
E L and NuVista Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and NuVista Energy
The main advantage of trading using opposite E L and NuVista Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, NuVista 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 NuVista Energy will offset losses from the drop in NuVista Energy's long position.| E L vs. iShares Canadian HYBrid | E L vs. Brompton European Dividend | E L vs. Solar Alliance Energy | E L vs. PHN Multi Style All Cap |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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