Correlation Between Elfun Trusts and CONSOLIDATED

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

Diversification Opportunities for Elfun Trusts and CONSOLIDATED

0.49

Correlation Coefficient

Elfun Trusts  CONSOLIDATED

Very weak diversification

The 3 months correlation between Elfun and CONSOLIDATED is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Elfun Trusts and CONSOLIDATED

Assuming the 90 days horizon Elfun Trusts Elfun is expected to under-perform the CONSOLIDATED. But the mutual fund apears to be less risky and, when comparing its historical volatility, Elfun Trusts Elfun is 2.12 times less risky than CONSOLIDATED. The mutual fund trades about -0.25 of its potential returns per unit of risk. The CONSOLIDATED EDISON N is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8,020  in CONSOLIDATED EDISON N on December 5, 2024 and sell it today you would lose (76.00) from holding CONSOLIDATED EDISON N or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Elfun Trusts Elfun  vs.  CONSOLIDATED EDISON N

Elfun Trusts Elfun

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

CONSOLIDATED EDISON

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSOLIDATED EDISON N investors.

Pair Trading with Elfun Trusts and CONSOLIDATED

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

The idea behind Elfun Trusts Elfun and CONSOLIDATED EDISON N 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.