Correlation Between E L and E L

Can any of the company-specific risk be diversified away by investing in both E L and E L 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 E L 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 E L Financial 3, you can compare the effects of market volatilities on E L and E L 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 E L. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and E L.

Diversification Opportunities for E L and E L

-0.77

Correlation Coefficient

E L  E L

Pay attention - limited upside

The 3 months correlation between ELF and ELF-PH is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and E L Financial 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of E L i.e., E L and E L go up and down completely randomly.

Pair Corralation between E L and E L

Assuming the 90 days trading horizon E L Financial Corp is expected to generate 1.62 times more return on investment than E L. However, E L is 1.62 times more volatile than E L Financial 3. It trades about 0.11 of its potential returns per unit of risk. E L Financial 3 is currently generating about 0.05 per unit of risk. If you would invest  82,823  in E L Financial Corp on August 31, 2024 and sell it today you would earn a total of  64,677  from holding E L Financial Corp or generate 78.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

E L Financial Corp  vs.  E L Financial 3

E L Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in December 2024.

E L Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E L Financial 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, E L is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with E L and E L

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

The idea behind E L Financial Corp and E L Financial 3 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 Transaction History module to view history of all your transactions and understand their impact on performance.