Correlation Between E L and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both E L and Westshore Terminals 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 Westshore Terminals 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 Westshore Terminals Investment, you can compare the effects of market volatilities on E L and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Westshore Terminals.
Diversification Opportunities for E L and Westshore Terminals
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELF and Westshore is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of E L i.e., E L and Westshore Terminals go up and down completely randomly.
Pair Corralation between E L and Westshore Terminals
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 2.91 times more return on investment than Westshore Terminals. However, E L is 2.91 times more volatile than Westshore Terminals Investment. It trades about 0.11 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.15 per unit of risk. If you would invest 130,000 in E L Financial Corp on November 9, 2024 and sell it today you would earn a total of 9,375 from holding E L Financial Corp or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial Corp vs. Westshore Terminals Investment
Performance |
| Timeline |
| E L Financial |
| Westshore Terminals |
E L and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Westshore Terminals
The main advantage of trading using opposite E L and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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