Correlation Between Element Fleet and Themac Resources

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

By analyzing existing cross correlation between Element Fleet Management and Themac Resources Group, you can compare the effects of market volatilities on Element Fleet and Themac Resources 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 Element Fleet with a short position of Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Themac Resources.

Diversification Opportunities for Element Fleet and Themac Resources

-0.28

Correlation Coefficient

Element Fleet  Themac Resources

Very good diversification

The 3 months correlation between Element and Themac is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and Element Fleet 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 Element Fleet Management are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Element Fleet i.e., Element Fleet and Themac Resources go up and down completely randomly.

Pair Corralation between Element Fleet and Themac Resources

Assuming the 90 days trading horizon Element Fleet is expected to generate 33.56 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Element Fleet Management is 10.56 times less risky than Themac Resources. It trades about 0.02 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Themac Resources Group on September 15, 2024 and sell it today you would earn a total of  0.50  from holding Themac Resources Group or generate 16.67% return on investment over 90 days.

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

Element Fleet Management  vs.  Themac Resources Group

Element Fleet Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Element Fleet and Themac Resources

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

The idea behind Element Fleet Management and Themac Resources Group 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.