Correlation Between Element Fleet and GGL Resources

Can any of the company-specific risk be diversified away by investing in both Element Fleet and GGL Resources 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 GGL Resources 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 GGL Resources Corp, you can compare the effects of market volatilities on Element Fleet and GGL Resources 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 GGL Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and GGL Resources.

Diversification Opportunities for Element Fleet and GGL Resources

-0.44

Correlation Coefficient

Element Fleet  GGL Resources

Very good diversification

The 3 months correlation between Element and GGL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and GGL Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGL Resources Corp 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 GGL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGL Resources Corp has no effect on the direction of Element Fleet i.e., Element Fleet and GGL Resources go up and down completely randomly.

Pair Corralation between Element Fleet and GGL Resources

Assuming the 90 days trading horizon Element Fleet Management is expected to under-perform the GGL Resources. But the stock apears to be less risky and, when comparing its historical volatility, Element Fleet Management is 11.87 times less risky than GGL Resources. The stock trades about -0.03 of its potential returns per unit of risk. The GGL Resources Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3.50  in GGL Resources Corp on December 20, 2024 and sell it today you would earn a total of  4.50  from holding GGL Resources Corp or generate 128.57% return on investment over 90 days.

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

Element Fleet Management  vs.  GGL Resources Corp

Element Fleet Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Fleet Management has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

GGL Resources Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GGL Resources Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, GGL Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Element Fleet and GGL Resources

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

The idea behind Element Fleet Management and GGL Resources Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..