Correlation Between Elfun Trusts and Buckeye

Can any of the company-specific risk be diversified away by investing in both Elfun Trusts and Buckeye 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 Elfun Trusts and Buckeye into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elfun Trusts Elfun and Buckeye Partners 675, you can compare the effects of market volatilities on Elfun Trusts and Buckeye 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 Elfun Trusts with a short position of Buckeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Trusts and Buckeye.

Diversification Opportunities for Elfun Trusts and Buckeye

-0.26

Correlation Coefficient

Elfun Trusts  Buckeye

Very good diversification

The 3 months correlation between Elfun and Buckeye is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and Buckeye Partners 675 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckeye Partners 675 and Elfun Trusts 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 Elfun Trusts Elfun are associated (or correlated) with Buckeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckeye Partners 675 has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and Buckeye go up and down completely randomly.

Pair Corralation between Elfun Trusts and Buckeye

Assuming the 90 days horizon Elfun Trusts Elfun is expected to generate 0.37 times more return on investment than Buckeye. However, Elfun Trusts Elfun is 2.73 times less risky than Buckeye. It trades about -0.13 of its potential returns per unit of risk. Buckeye Partners 675 is currently generating about -0.45 per unit of risk. If you would invest  9,600  in Elfun Trusts Elfun on October 20, 2024 and sell it today you would lose (605.00) from holding Elfun Trusts Elfun or give up 6.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.32%
Values	Daily Returns

Elfun Trusts Elfun  vs.  Buckeye Partners 675

Elfun Trusts Elfun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elfun Trusts Elfun has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Buckeye Partners 675

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buckeye Partners 675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Buckeye is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elfun Trusts and Buckeye

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

The idea behind Elfun Trusts Elfun and Buckeye Partners 675 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.