Correlation Between Element Solutions and SNC Lavalin
Can any of the company-specific risk be diversified away by investing in both Element Solutions and SNC Lavalin 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 Element Solutions and SNC Lavalin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and SNC Lavalin Group, you can compare the effects of market volatilities on Element Solutions and SNC Lavalin 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 Element Solutions with a short position of SNC Lavalin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and SNC Lavalin.
Diversification Opportunities for Element Solutions and SNC Lavalin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Element and SNC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and SNC Lavalin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNC Lavalin Group and Element Solutions 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 Element Solutions are associated (or correlated) with SNC Lavalin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNC Lavalin Group has no effect on the direction of Element Solutions i.e., Element Solutions and SNC Lavalin go up and down completely randomly.
Pair Corralation between Element Solutions and SNC Lavalin
Considering the 90-day investment horizon Element Solutions is expected to generate 1.93 times less return on investment than SNC Lavalin. But when comparing it to its historical volatility, Element Solutions is 1.48 times less risky than SNC Lavalin. It trades about 0.07 of its potential returns per unit of risk. SNC Lavalin Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,479 in SNC Lavalin Group on August 24, 2024 and sell it today you would earn a total of 2,622 from holding SNC Lavalin Group or generate 105.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.61% |
| Values | Daily Returns |
Element Solutions vs. SNC Lavalin Group
Performance |
| Timeline |
| Element Solutions |
| SNC Lavalin Group |
Element Solutions and SNC Lavalin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and SNC Lavalin
The main advantage of trading using opposite Element Solutions and SNC Lavalin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, SNC Lavalin 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 SNC Lavalin will offset losses from the drop in SNC Lavalin's long position.| Element Solutions vs. Eshallgo Class A | Element Solutions vs. Amtech Systems | Element Solutions vs. Gold Fields Ltd | Element Solutions vs. Aegean Airlines SA |
| SNC Lavalin vs. Element Solutions | SNC Lavalin vs. Orion Engineered Carbons | SNC Lavalin vs. Minerals Technologies | SNC Lavalin vs. Ingevity Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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