Correlation Between Elfun Trusts and GEORGIA

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

By analyzing existing cross correlation between Elfun Trusts Elfun and GEORGIA PWR 325, you can compare the effects of market volatilities on Elfun Trusts and GEORGIA 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 Elfun Trusts with a short position of GEORGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Trusts and GEORGIA.

Diversification Opportunities for Elfun Trusts and GEORGIA

-0.63

Correlation Coefficient

Elfun Trusts  GEORGIA

Excellent diversification

The 3 months correlation between Elfun and GEORGIA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and GEORGIA PWR 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEORGIA PWR 325 and Elfun Trusts 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 Elfun Trusts Elfun are associated (or correlated) with GEORGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEORGIA PWR 325 has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and GEORGIA go up and down completely randomly.

Pair Corralation between Elfun Trusts and GEORGIA

Assuming the 90 days horizon Elfun Trusts Elfun is expected to generate 1.3 times more return on investment than GEORGIA. However, Elfun Trusts is 1.3 times more volatile than GEORGIA PWR 325. It trades about 0.15 of its potential returns per unit of risk. GEORGIA PWR 325 is currently generating about -0.14 per unit of risk. If you would invest  9,378  in Elfun Trusts Elfun on September 14, 2024 and sell it today you would earn a total of  608.00  from holding Elfun Trusts Elfun or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Elfun Trusts Elfun  vs.  GEORGIA PWR 325

Elfun Trusts Elfun

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Elfun Trusts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GEORGIA PWR 325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEORGIA PWR 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GEORGIA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elfun Trusts and GEORGIA

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

The idea behind Elfun Trusts Elfun and GEORGIA PWR 325 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.