Correlation Between Great Elm and Credit Enhanced

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

By analyzing existing cross correlation between Great Elm Group and Credit Enhanced Corts, you can compare the effects of market volatilities on Great Elm and Credit Enhanced 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 Credit Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Credit Enhanced.

Diversification Opportunities for Great Elm and Credit Enhanced

-0.41

Correlation Coefficient

Great Elm  Credit Enhanced

Very good diversification

The 3 months correlation between Great and Credit is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts 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 Group are associated (or correlated) with Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of Great Elm i.e., Great Elm and Credit Enhanced go up and down completely randomly.

Pair Corralation between Great Elm and Credit Enhanced

Assuming the 90 days horizon Great Elm is expected to generate 1.15 times less return on investment than Credit Enhanced. In addition to that, Great Elm is 1.81 times more volatile than Credit Enhanced Corts. It trades about 0.03 of its total potential returns per unit of risk. Credit Enhanced Corts is currently generating about 0.06 per unit of volatility. If you would invest  2,600  in Credit Enhanced Corts on December 25, 2024 and sell it today you would earn a total of  45.00  from holding Credit Enhanced Corts or generate 1.73% return on investment over 90 days.

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

Great Elm Group  vs.  Credit Enhanced Corts

Great Elm Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Credit Enhanced Corts

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Enhanced Corts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Credit Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Great Elm and Credit Enhanced

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

The idea behind Great Elm Group and Credit Enhanced Corts 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.