Correlation Between Winpak and E L
Can any of the company-specific risk be diversified away by investing in both Winpak 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 Winpak and E L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and E L Financial Corp, you can compare the effects of market volatilities on Winpak 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 Winpak with a short position of E L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and E L.
Diversification Opportunities for Winpak and E L
Very weak diversification
The 3 months correlation between Winpak and ELF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Winpak 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 Winpak 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 Winpak 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 Winpak i.e., Winpak and E L go up and down completely randomly.
Pair Corralation between Winpak and E L
Assuming the 90 days trading horizon Winpak is expected to under-perform the E L. But the stock apears to be less risky and, when comparing its historical volatility, Winpak is 1.33 times less risky than E L. The stock trades about -0.09 of its potential returns per unit of risk. The E L Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 131,500 in E L Financial Corp on August 29, 2024 and sell it today you would earn a total of 16,000 from holding E L Financial Corp or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. E L Financial Corp
Performance |
| Timeline |
| Winpak |
| E L Financial |
Winpak and E L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and E L
The main advantage of trading using opposite Winpak and E L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak 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.| Winpak vs. Globex Mining Enterprises | Winpak vs. Guru Organic Energy | Winpak vs. Aya Gold Silver | Winpak vs. Metalero Mining Corp |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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