Correlation Between SECURITAS and ELEMENT FLEET

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

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

Diversification Opportunities for SECURITAS and ELEMENT FLEET

-0.14

Correlation Coefficient

SECURITAS  ELEMENT FLEET

Good diversification

The 3 months correlation between SECURITAS and ELEMENT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and ELEMENT FLEET MGMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT FLEET MGMT and SECURITAS 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 SECURITAS B are associated (or correlated) with ELEMENT FLEET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT FLEET MGMT has no effect on the direction of SECURITAS i.e., SECURITAS and ELEMENT FLEET go up and down completely randomly.

Pair Corralation between SECURITAS and ELEMENT FLEET

Assuming the 90 days trading horizon SECURITAS B is expected to generate 0.85 times more return on investment than ELEMENT FLEET. However, SECURITAS B is 1.18 times less risky than ELEMENT FLEET. It trades about 0.12 of its potential returns per unit of risk. ELEMENT FLEET MGMT is currently generating about -0.06 per unit of risk. If you would invest  1,203  in SECURITAS B on December 24, 2024 and sell it today you would earn a total of  116.00  from holding SECURITAS B or generate 9.64% return on investment over 90 days.

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

SECURITAS B   vs.  ELEMENT FLEET MGMT

SECURITAS B

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECURITAS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ELEMENT FLEET MGMT

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELEMENT FLEET MGMT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SECURITAS and ELEMENT FLEET

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

The idea behind SECURITAS B and ELEMENT FLEET MGMT 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..