Correlation Between E L and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both E L and Prime Dividend 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 Prime Dividend 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 Prime Dividend Corp, you can compare the effects of market volatilities on E L and Prime Dividend 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 Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Prime Dividend.
Diversification Opportunities for E L and Prime Dividend
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ELF and Prime is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend 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 Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of E L i.e., E L and Prime Dividend go up and down completely randomly.
Pair Corralation between E L and Prime Dividend
Assuming the 90 days trading horizon E L is expected to generate 1.25 times less return on investment than Prime Dividend. But when comparing it to its historical volatility, E L Financial Corp is 1.72 times less risky than Prime Dividend. It trades about 0.13 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 553.00 in Prime Dividend Corp on September 14, 2024 and sell it today you would earn a total of 326.00 from holding Prime Dividend Corp or generate 58.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. Prime Dividend Corp
Performance |
| Timeline |
| E L Financial |
| Prime Dividend Corp |
E L and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Prime Dividend
The main advantage of trading using opposite E L and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Prime Dividend vs. Berkshire Hathaway CDR | Prime Dividend vs. E L Financial Corp | Prime Dividend vs. E L Financial 3 | Prime Dividend 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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