Correlation Between Element Fleet and Sienna Resources

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

Diversification Opportunities for Element Fleet and Sienna Resources

-0.19

Correlation Coefficient

Element Fleet  Sienna Resources

Good diversification

The 3 months correlation between Element and Sienna is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Sienna Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna 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 Sienna Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Resources has no effect on the direction of Element Fleet i.e., Element Fleet and Sienna Resources go up and down completely randomly.

Pair Corralation between Element Fleet and Sienna Resources

Assuming the 90 days trading horizon Element Fleet is expected to generate 53.23 times less return on investment than Sienna Resources. But when comparing it to its historical volatility, Element Fleet Management is 12.34 times less risky than Sienna Resources. It trades about 0.02 of its potential returns per unit of risk. Sienna Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Sienna Resources on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Sienna Resources or generate 0.0% 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.  Sienna Resources

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.

Sienna Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sienna Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Element Fleet and Sienna Resources

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

The idea behind Element Fleet Management and Sienna Resources 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.