Correlation Between General Environmental and Element Solutions
Can any of the company-specific risk be diversified away by investing in both General Environmental and Element Solutions 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 General Environmental and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Environmental Management and Element Solutions, you can compare the effects of market volatilities on General Environmental and Element Solutions 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 General Environmental with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Element Solutions.
Diversification Opportunities for General Environmental and Element Solutions
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between General and Element is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Manageme and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and General Environmental 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 General Environmental Management are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of General Environmental i.e., General Environmental and Element Solutions go up and down completely randomly.
Pair Corralation between General Environmental and Element Solutions
Given the investment horizon of 90 days General Environmental Management is expected to generate 11.01 times more return on investment than Element Solutions. However, General Environmental is 11.01 times more volatile than Element Solutions. It trades about 0.03 of its potential returns per unit of risk. Element Solutions is currently generating about 0.11 per unit of risk. If you would invest 74.00 in General Environmental Management on November 3, 2024 and sell it today you would lose (4.00) from holding General Environmental Management or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Environmental Manageme vs. Element Solutions
Performance |
| Timeline |
| General Environmental |
| Element Solutions |
General Environmental and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Environmental and Element Solutions
The main advantage of trading using opposite General Environmental and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Environmental position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| General Environmental vs. Element Solutions | General Environmental vs. Orion Engineered Carbons | General Environmental vs. Minerals Technologies | General Environmental vs. Ingevity Corp |
| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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