Correlation Between Eltek and Broadleaf

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

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

Diversification Opportunities for Eltek and Broadleaf

-0.09

Correlation Coefficient

Eltek  Broadleaf

Good diversification

The 3 months correlation between Eltek and Broadleaf is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Broadleaf Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadleaf and Eltek 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 Eltek are associated (or correlated) with Broadleaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadleaf has no effect on the direction of Eltek i.e., Eltek and Broadleaf go up and down completely randomly.

Pair Corralation between Eltek and Broadleaf

Given the investment horizon of 90 days Eltek is expected to generate 89.89 times more return on investment than Broadleaf. However, Eltek is 89.89 times more volatile than Broadleaf Co. It trades about 0.03 of its potential returns per unit of risk. Broadleaf Co is currently generating about 0.16 per unit of risk. If you would invest  1,081  in Eltek on October 7, 2024 and sell it today you would earn a total of  21.00  from holding Eltek or generate 1.94% return on investment over 90 days.

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

Eltek  vs.  Broadleaf Co

Eltek

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Broadleaf

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadleaf Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Broadleaf is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eltek and Broadleaf

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

The idea behind Eltek and Broadleaf Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.