Correlation Between E L and Tucows
Can any of the company-specific risk be diversified away by investing in both E L and Tucows 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 Tucows 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 Tucows Inc, you can compare the effects of market volatilities on E L and Tucows 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 Tucows. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Tucows.
Diversification Opportunities for E L and Tucows
Excellent diversification
The 3 months correlation between ELF and Tucows is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc 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 Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of E L i.e., E L and Tucows go up and down completely randomly.
Pair Corralation between E L and Tucows
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.28 times more return on investment than Tucows. However, E L Financial Corp is 3.63 times less risky than Tucows. It trades about 0.11 of its potential returns per unit of risk. Tucows Inc is currently generating about -0.01 per unit of risk. If you would invest 82,873 in E L Financial Corp on September 4, 2024 and sell it today you would earn a total of 64,627 from holding E L Financial Corp or generate 77.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
E L Financial Corp vs. Tucows Inc
Performance |
| Timeline |
| E L Financial |
| Tucows Inc |
E L and Tucows Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Tucows
The main advantage of trading using opposite E L and Tucows positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Tucows 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 Tucows will offset losses from the drop in Tucows' long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Tucows vs. TECSYS Inc | Tucows vs. Descartes Systems Group | Tucows vs. Enghouse Systems | Tucows vs. Evertz Technologies Limited |
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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