Correlation Between E L and Dividend Growth
Can any of the company-specific risk be diversified away by investing in both E L and Dividend Growth 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 E L and Dividend Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial 3 and Dividend Growth Split, you can compare the effects of market volatilities on E L and Dividend Growth 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 E L with a short position of Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Dividend Growth.
Diversification Opportunities for E L and Dividend Growth
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELF-PH and Dividend is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split and E L 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 E L Financial 3 are associated (or correlated) with Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of E L i.e., E L and Dividend Growth go up and down completely randomly.
Pair Corralation between E L and Dividend Growth
Assuming the 90 days trading horizon E L Financial 3 is expected to generate 0.6 times more return on investment than Dividend Growth. However, E L Financial 3 is 1.65 times less risky than Dividend Growth. It trades about 0.18 of its potential returns per unit of risk. Dividend Growth Split is currently generating about -0.11 per unit of risk. If you would invest 2,230 in E L Financial 3 on September 22, 2024 and sell it today you would earn a total of 49.00 from holding E L Financial 3 or generate 2.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
E L Financial 3 vs. Dividend Growth Split
Performance |
Timeline |
E L Financial |
Dividend Growth Split |
E L and Dividend Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with E L and Dividend Growth
The main advantage of trading using opposite E L and Dividend Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Dividend Growth 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 Dividend Growth will offset losses from the drop in Dividend Growth's long position.E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings | E L vs. Fairfax Financial Holdings |
Dividend Growth vs. Berkshire Hathaway CDR | Dividend Growth vs. E L Financial Corp | Dividend Growth vs. E L Financial 3 | Dividend Growth vs. Molson Coors Canada |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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