Correlation Between Elastic NV and ReposiTrak

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

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

Diversification Opportunities for Elastic NV and ReposiTrak

0.21

Correlation Coefficient

Elastic NV  ReposiTrak

Modest diversification

The 3 months correlation between Elastic and ReposiTrak is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak and Elastic NV 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 Elastic NV are associated (or correlated) with ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of Elastic NV i.e., Elastic NV and ReposiTrak go up and down completely randomly.

Pair Corralation between Elastic NV and ReposiTrak

Given the investment horizon of 90 days Elastic NV is expected to generate 1.68 times more return on investment than ReposiTrak. However, Elastic NV is 1.68 times more volatile than ReposiTrak. It trades about -0.01 of its potential returns per unit of risk. ReposiTrak is currently generating about -0.05 per unit of risk. If you would invest  10,267  in Elastic NV on December 23, 2024 and sell it today you would lose (546.00) from holding Elastic NV or give up 5.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Elastic NV  vs.  ReposiTrak

Elastic NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elastic NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Elastic NV is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ReposiTrak

Risk-Adjusted Performance

Very Weak

Over the last 90 days ReposiTrak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Elastic NV and ReposiTrak

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

The idea behind Elastic NV and ReposiTrak 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.