Correlation Between E L and Sirona Biochem
Can any of the company-specific risk be diversified away by investing in both E L and Sirona Biochem 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 Sirona Biochem 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 Sirona Biochem Corp, you can compare the effects of market volatilities on E L and Sirona Biochem 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 Sirona Biochem. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Sirona Biochem.
Diversification Opportunities for E L and Sirona Biochem
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between ELF and Sirona is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem 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 Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of E L i.e., E L and Sirona Biochem go up and down completely randomly.
Pair Corralation between E L and Sirona Biochem
Assuming the 90 days trading horizon E L is expected to generate 1.63 times less return on investment than Sirona Biochem. But when comparing it to its historical volatility, E L Financial Corp is 7.89 times less risky than Sirona Biochem. It trades about 0.12 of its potential returns per unit of risk. Sirona Biochem Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Sirona Biochem Corp on September 12, 2024 and sell it today you would lose (6.50) from holding Sirona Biochem Corp or give up 54.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. Sirona Biochem Corp
Performance |
| Timeline |
| E L Financial |
| Sirona Biochem Corp |
E L and Sirona Biochem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Sirona Biochem
The main advantage of trading using opposite E L and Sirona Biochem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Sirona Biochem 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 Sirona Biochem will offset losses from the drop in Sirona Biochem's long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Sirona Biochem vs. Premium Income | Sirona Biochem vs. E L Financial Corp | Sirona Biochem vs. Fairfax Financial Holdings | Sirona Biochem vs. Fairfax Fin Hld |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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