Correlation Between E L and George Weston

Can any of the company-specific risk be diversified away by investing in both E L and George Weston 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 George Weston 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 George Weston 520, you can compare the effects of market volatilities on E L and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and George Weston.

Diversification Opportunities for E L and George Weston

0.52

Correlation Coefficient

E L  George Weston

Very weak diversification

The 3 months correlation between ELF and George is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and George Weston 520 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston 520 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston 520 has no effect on the direction of E L i.e., E L and George Weston go up and down completely randomly.

Pair Corralation between E L and George Weston

Assuming the 90 days trading horizon E L Financial Corp is expected to generate 6.02 times more return on investment than George Weston. However, E L is 6.02 times more volatile than George Weston 520. It trades about 0.07 of its potential returns per unit of risk. George Weston 520 is currently generating about 0.16 per unit of risk. If you would invest  118,581  in E L Financial Corp on December 30, 2024 and sell it today you would earn a total of  13,013  from holding E L Financial Corp or generate 10.97% return on investment over 90 days.

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

E L Financial Corp  vs.  George Weston 520

E L Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 5 (%) 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 April 2025.

George Weston 520

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston 520 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, George Weston is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with E L and George Weston

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

The idea behind E L Financial Corp and George Weston 520 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.