Correlation Between E L and Accord Financial
Can any of the company-specific risk be diversified away by investing in both E L and Accord Financial 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 E L and Accord Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial Corp and Accord Financial Corp, you can compare the effects of market volatilities on E L and Accord Financial 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 E L with a short position of Accord Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Accord Financial.
Diversification Opportunities for E L and Accord Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELF and Accord is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Accord Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accord Financial Corp and E L 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 E L Financial Corp are associated (or correlated) with Accord Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accord Financial Corp has no effect on the direction of E L i.e., E L and Accord Financial go up and down completely randomly.
Pair Corralation between E L and Accord Financial
Assuming the 90 days trading horizon E L Financial Corp is expected to generate 1.06 times more return on investment than Accord Financial. However, E L is 1.06 times more volatile than Accord Financial Corp. It trades about 0.09 of its potential returns per unit of risk. Accord Financial Corp is currently generating about -0.06 per unit of risk. If you would invest 129,388 in E L Financial Corp on September 12, 2024 and sell it today you would earn a total of 10,012 from holding E L Financial Corp or generate 7.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
E L Financial Corp vs. Accord Financial Corp
Performance |
Timeline |
E L Financial |
Accord Financial Corp |
E L and Accord Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with E L and Accord Financial
The main advantage of trading using opposite E L and Accord Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Accord Financial 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 Accord Financial will offset losses from the drop in Accord Financial's long position.E L vs. Algoma Central | E L vs. Winpak | E L vs. Fairfax Financial Holdings | E L vs. Economic Investment Trust |
Accord Financial vs. Algoma Central | Accord Financial vs. Chesswood Group Limited | Accord Financial vs. Clairvest Group | Accord Financial vs. Clarke Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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