Correlation Between E L and Pentagon I
Can any of the company-specific risk be diversified away by investing in both E L and Pentagon I 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 Pentagon I 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 Pentagon I Capital, you can compare the effects of market volatilities on E L and Pentagon I 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 Pentagon I. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Pentagon I.
Diversification Opportunities for E L and Pentagon I
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELF and Pentagon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital 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 Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of E L i.e., E L and Pentagon I go up and down completely randomly.
Pair Corralation between E L and Pentagon I
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.14 times more return on investment than Pentagon I. However, E L Financial Corp is 6.97 times less risky than Pentagon I. It trades about 0.14 of its potential returns per unit of risk. Pentagon I Capital is currently generating about 0.0 per unit of risk. If you would invest 91,630 in E L Financial Corp on September 14, 2024 and sell it today you would earn a total of 48,369 from holding E L Financial Corp or generate 52.79% 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. Pentagon I Capital
Performance |
| Timeline |
| E L Financial |
| Pentagon I Capital |
E L and Pentagon I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Pentagon I
The main advantage of trading using opposite E L and Pentagon I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Pentagon I 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 Pentagon I will offset losses from the drop in Pentagon I's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Pentagon I vs. Berkshire Hathaway CDR | Pentagon I vs. E L Financial Corp | Pentagon I vs. E L Financial 3 | Pentagon I 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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