Correlation Between E L and Royal Helium
Can any of the company-specific risk be diversified away by investing in both E L and Royal Helium 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 Royal Helium 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 Royal Helium, you can compare the effects of market volatilities on E L and Royal Helium 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 Royal Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Royal Helium.
Diversification Opportunities for E L and Royal Helium
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELF and Royal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium 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 Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of E L i.e., E L and Royal Helium go up and down completely randomly.
Pair Corralation between E L and Royal Helium
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.17 times more return on investment than Royal Helium. However, E L Financial Corp is 5.85 times less risky than Royal Helium. It trades about 0.16 of its potential returns per unit of risk. Royal Helium is currently generating about -0.07 per unit of risk. If you would invest 93,968 in E L Financial Corp on August 26, 2024 and sell it today you would earn a total of 53,532 from holding E L Financial Corp or generate 56.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. Royal Helium
Performance |
| Timeline |
| E L Financial |
| Royal Helium |
E L and Royal Helium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Royal Helium
The main advantage of trading using opposite E L and Royal Helium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Royal Helium 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 Royal Helium will offset losses from the drop in Royal Helium's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Royal Helium vs. Desert Mountain Energy | Royal Helium vs. First Helium | Royal Helium vs. Avanti Energy | Royal Helium vs. Total Helium |
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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