Correlation Between Great Elm and Popular Capital
Can any of the company-specific risk be diversified away by investing in both Great Elm and Popular Capital 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 Popular Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Group and Popular Capital Trust, you can compare the effects of market volatilities on Great Elm and Popular Capital 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 Popular Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Popular Capital.
Diversification Opportunities for Great Elm and Popular Capital
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Popular is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Popular Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Capital Trust 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 Group are associated (or correlated) with Popular Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Capital Trust has no effect on the direction of Great Elm i.e., Great Elm and Popular Capital go up and down completely randomly.
Pair Corralation between Great Elm and Popular Capital
Assuming the 90 days horizon Great Elm Group is expected to generate 1.75 times more return on investment than Popular Capital. However, Great Elm is 1.75 times more volatile than Popular Capital Trust. It trades about 0.07 of its potential returns per unit of risk. Popular Capital Trust is currently generating about 0.02 per unit of risk. If you would invest 1,276 in Great Elm Group on August 25, 2024 and sell it today you would earn a total of 1,130 from holding Great Elm Group or generate 88.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.38% |
| Values | Daily Returns |
Great Elm Group vs. Popular Capital Trust
Performance |
| Timeline |
| Great Elm Group |
| Popular Capital Trust |
Great Elm and Popular Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Popular Capital
The main advantage of trading using opposite Great Elm and Popular Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Popular Capital 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 Popular Capital will offset losses from the drop in Popular Capital's long position.The idea behind Great Elm Group and Popular Capital Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Popular Capital vs. BFC Capital Trust | Popular Capital vs. Popular | Popular Capital vs. Oxford Lane Capital | Popular Capital vs. Wintrust Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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