Correlation Between E L and Dividend

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Can any of the company-specific risk be diversified away by investing in both E L and Dividend 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 Dividend 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 Dividend 15 Split, you can compare the effects of market volatilities on E L and Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Dividend.

Diversification Opportunities for E L and Dividend

ELFDividendDiversified AwayELFDividendDiversified Away100%
0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ELF and Dividend is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of E L i.e., E L and Dividend go up and down completely randomly.

Pair Corralation between E L and Dividend

Assuming the 90 days trading horizon E L is expected to generate 14.04 times less return on investment than Dividend. In addition to that, E L is 1.21 times more volatile than Dividend 15 Split. It trades about 0.0 of its total potential returns per unit of risk. Dividend 15 Split is currently generating about 0.05 per unit of volatility. If you would invest  591.00  in Dividend 15 Split on October 11, 2024 and sell it today you would earn a total of  20.00  from holding Dividend 15 Split or generate 3.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

E L Financial Corp  vs.  Dividend 15 Split

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 51015
JavaScript chart by amCharts 3.21.15ELF DFN
       Timeline  
E L Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days E L Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, E L is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1,3001,3501,4001,4501,500
Dividend 15 Split 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5.65.866.26.4

E L and Dividend Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.92-3.71-2.5-1.29-0.08191.132.343.544.755.96 0.050.100.150.20
JavaScript chart by amCharts 3.21.15ELF DFN
       Returns  

Pair Trading with E L and Dividend

The main advantage of trading using opposite E L and Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Dividend 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 Dividend will offset losses from the drop in Dividend's long position.
The idea behind E L Financial Corp and Dividend 15 Split 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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