Correlation Between Elfun Trusts and Elanco

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

Diversification Opportunities for Elfun Trusts and Elanco

-0.22

Correlation Coefficient

Elfun Trusts  Elanco

Very good diversification

The 3 months correlation between Elfun and Elanco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health 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 Elanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and Elanco go up and down completely randomly.

Pair Corralation between Elfun Trusts and Elanco

Assuming the 90 days horizon Elfun Trusts Elfun is expected to under-perform the Elanco. But the mutual fund apears to be less risky and, when comparing its historical volatility, Elfun Trusts Elfun is 1.05 times less risky than Elanco. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Elanco Animal Health is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  10,230  in Elanco Animal Health on December 5, 2024 and sell it today you would lose (275.00) from holding Elanco Animal Health or give up 2.69% of portfolio value over 90 days.

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

Elfun Trusts Elfun  vs.  Elanco Animal Health

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.

Elanco Animal Health

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Elfun Trusts and Elanco

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

The idea behind Elfun Trusts Elfun and Elanco Animal Health 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.