Correlation Between Element Fleet and Medical Facilities

Can any of the company-specific risk be diversified away by investing in both Element Fleet and Medical Facilities 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 Element Fleet and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Element Fleet Management and Medical Facilities, you can compare the effects of market volatilities on Element Fleet and Medical Facilities 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 Element Fleet with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Medical Facilities.

Diversification Opportunities for Element Fleet and Medical Facilities

0.27

Correlation Coefficient

Element Fleet  Medical Facilities

Modest diversification

The 3 months correlation between Element and Medical is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Element Fleet 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 Element Fleet Management are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Element Fleet i.e., Element Fleet and Medical Facilities go up and down completely randomly.

Pair Corralation between Element Fleet and Medical Facilities

Assuming the 90 days trading horizon Element Fleet is expected to generate 1.48 times less return on investment than Medical Facilities. But when comparing it to its historical volatility, Element Fleet Management is 1.09 times less risky than Medical Facilities. It trades about 0.08 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  755.00  in Medical Facilities on September 23, 2024 and sell it today you would earn a total of  807.00  from holding Medical Facilities or generate 106.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Element Fleet Management  vs.  Medical Facilities

Element Fleet Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Medical Facilities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Element Fleet and Medical Facilities

The main advantage of trading using opposite Element Fleet and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.

The idea behind Element Fleet Management and Medical Facilities 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.