Correlation Between Element Fleet and Winpak

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

Diversification Opportunities for Element Fleet and Winpak

0.64

Correlation Coefficient

Element Fleet  Winpak

Poor diversification

The 3 months correlation between Element and Winpak is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Element Fleet i.e., Element Fleet and Winpak go up and down completely randomly.

Pair Corralation between Element Fleet and Winpak

Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.84 times more return on investment than Winpak. However, Element Fleet Management is 1.19 times less risky than Winpak. It trades about -0.01 of its potential returns per unit of risk. Winpak is currently generating about -0.16 per unit of risk. If you would invest  2,895  in Element Fleet Management on December 30, 2024 and sell it today you would lose (25.00) from holding Element Fleet Management or give up 0.86% of portfolio value over 90 days.

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

Element Fleet Management  vs.  Winpak

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.

Winpak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winpak has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Element Fleet and Winpak

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

The idea behind Element Fleet Management and Winpak 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.