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

-0.59

Correlation Coefficient

Elfun Trusts  CONSOLIDATED

Excellent diversification

The 3 months correlation between Elfun and CONSOLIDATED is -0.59. 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 is expected to generate 2.18 times less return on investment than CONSOLIDATED. In addition to that, Elfun Trusts is 1.18 times more volatile than CONSOLIDATED EDISON N. It trades about 0.08 of its total potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.21 per unit of volatility. If you would invest  9,730  in CONSOLIDATED EDISON N on September 15, 2024 and sell it today you would earn a total of  218.00  from holding CONSOLIDATED EDISON N or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Elfun Trusts Elfun  vs.  CONSOLIDATED EDISON N

Elfun Trusts Elfun

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Elfun Trusts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, CONSOLIDATED 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 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.