Correlation Between Great Elm and PALT Old

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

Diversification Opportunities for Great Elm and PALT Old

0.0

Correlation Coefficient

Great Elm  PALT Old

Pay attention - limited upside

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

Pair Corralation between Great Elm and PALT Old

If you would invest  2,461  in Great Elm Capital on December 26, 2024 and sell it today you would earn a total of  49.00  from holding Great Elm Capital or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Great Elm Capital  vs.  PALT Old

Great Elm Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Great Elm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PALT Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days PALT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, PALT Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Great Elm and PALT Old

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

The idea behind Great Elm Capital and PALT Old 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.