Correlation Between Great Elm and Atlas Corp
Can any of the company-specific risk be diversified away by investing in both Great Elm and Atlas Corp 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 Great Elm and Atlas Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Capital and Atlas Corp, you can compare the effects of market volatilities on Great Elm and Atlas Corp 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 Great Elm with a short position of Atlas Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Atlas Corp.
Diversification Opportunities for Great Elm and Atlas Corp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Atlas is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and Atlas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Corp and Great Elm 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 Great Elm Capital are associated (or correlated) with Atlas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Corp has no effect on the direction of Great Elm i.e., Great Elm and Atlas Corp go up and down completely randomly.
Pair Corralation between Great Elm and Atlas Corp
Assuming the 90 days horizon Great Elm Capital is expected to under-perform the Atlas Corp. But the stock apears to be less risky and, when comparing its historical volatility, Great Elm Capital is 2.04 times less risky than Atlas Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Atlas Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,495 in Atlas Corp on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Atlas Corp or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Great Elm Capital vs. Atlas Corp
Performance |
| Timeline |
| Great Elm Capital |
| Atlas Corp |
Great Elm and Atlas Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Atlas Corp
The main advantage of trading using opposite Great Elm and Atlas Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Atlas Corp 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 Atlas Corp will offset losses from the drop in Atlas Corp's long position.| Great Elm vs. Gladstone Investment | Great Elm vs. HUMANA INC | Great Elm vs. Aquagold International | Great Elm vs. Barloworld Ltd ADR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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