Correlation Between KDA and E L
Can any of the company-specific risk be diversified away by investing in both KDA and E L 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 KDA and E L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDA Group and E L Financial Corp, you can compare the effects of market volatilities on KDA and E L 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 KDA with a short position of E L. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDA and E L.
Diversification Opportunities for KDA and E L
Excellent diversification
The 3 months correlation between KDA and ELF is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KDA Group and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial and KDA 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 KDA Group are associated (or correlated) with E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of KDA i.e., KDA and E L go up and down completely randomly.
Pair Corralation between KDA and E L
Assuming the 90 days horizon KDA Group is expected to generate 4.62 times more return on investment than E L. However, KDA is 4.62 times more volatile than E L Financial Corp. It trades about 0.05 of its potential returns per unit of risk. E L Financial Corp is currently generating about 0.1 per unit of risk. If you would invest 25.00 in KDA Group on September 3, 2024 and sell it today you would earn a total of 2.00 from holding KDA Group or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KDA Group vs. E L Financial Corp
Performance |
| Timeline |
| KDA Group |
| E L Financial |
KDA and E L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDA and E L
The main advantage of trading using opposite KDA and E L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDA position performs unexpectedly, E L 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 E L will offset losses from the drop in E L's long position.| KDA vs. Air Canada | KDA vs. Algoma Steel Group | KDA vs. Maple Leaf Foods | KDA vs. Brookfield Office Properties |
| E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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