Correlation Between E L and Tucows

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

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

Diversification Opportunities for E L and Tucows

-0.71

Correlation Coefficient

E L  Tucows

Pay attention - limited upside

The 3 months correlation between ELF and Tucows is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc 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 Corp are associated (or correlated) with Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of E L i.e., E L and Tucows go up and down completely randomly.

Pair Corralation between E L and Tucows

Assuming the 90 days trading horizon E L Financial Corp is expected to generate 0.28 times more return on investment than Tucows. However, E L Financial Corp is 3.63 times less risky than Tucows. It trades about 0.11 of its potential returns per unit of risk. Tucows Inc is currently generating about -0.01 per unit of risk. If you would invest  82,813  in E L Financial Corp on September 5, 2024 and sell it today you would earn a total of  64,687  from holding E L Financial Corp or generate 78.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

E L Financial Corp  vs.  Tucows Inc

E L Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tucows Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tucows Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with E L and Tucows

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

The idea behind E L Financial Corp and Tucows Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.