Correlation Between Great Elm and Presidio Property

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

By analyzing existing cross correlation between Great Elm Capital and Presidio Property Trust, you can compare the effects of market volatilities on Great Elm and Presidio Property 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 Great Elm with a short position of Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Presidio Property.

Diversification Opportunities for Great Elm and Presidio Property

0.0

Correlation Coefficient

Great Elm  Presidio Property

Pay attention - limited upside

The 3 months correlation between Great and Presidio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust and Great Elm 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 Great Elm Capital are associated (or correlated) with Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Great Elm i.e., Great Elm and Presidio Property go up and down completely randomly.

Pair Corralation between Great Elm and Presidio Property

Given the investment horizon of 90 days Great Elm Capital is expected to generate 0.36 times more return on investment than Presidio Property. However, Great Elm Capital is 2.76 times less risky than Presidio Property. It trades about -0.01 of its potential returns per unit of risk. Presidio Property Trust is currently generating about -0.1 per unit of risk. If you would invest  1,057  in Great Elm Capital on December 29, 2024 and sell it today you would lose (17.00) from holding Great Elm Capital or give up 1.61% of portfolio value over 90 days.

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

Great Elm Capital  vs.  Presidio Property Trust

Great Elm Capital

Risk-Adjusted Performance

Very Weak

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

Presidio Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Great Elm and Presidio Property

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

The idea behind Great Elm Capital and Presidio Property Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.