Correlation Between Hampton Financial and E L

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

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

Diversification Opportunities for Hampton Financial and E L

-0.47

Correlation Coefficient

Hampton Financial  E L

Very good diversification

The 3 months correlation between Hampton and ELF-PG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hampton Financial Corp and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial and Hampton Financial 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 Hampton Financial Corp are associated (or correlated) with E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of Hampton Financial i.e., Hampton Financial and E L go up and down completely randomly.

Pair Corralation between Hampton Financial and E L

Assuming the 90 days horizon Hampton Financial Corp is expected to under-perform the E L. In addition to that, Hampton Financial is 2.73 times more volatile than E L Financial Corp. It trades about -0.14 of its total potential returns per unit of risk. E L Financial Corp is currently generating about 0.11 per unit of volatility. If you would invest  1,965  in E L Financial Corp on December 21, 2024 and sell it today you would earn a total of  65.00  from holding E L Financial Corp or generate 3.31% return on investment over 90 days.

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

Hampton Financial Corp  vs.  E L Financial Corp

Hampton Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hampton Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

E L Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, E L is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hampton Financial and E L

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

The idea behind Hampton Financial Corp and E L Financial Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.