Correlation Between Elfun Trusts and MASSACHUSETTS

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

Diversification Opportunities for Elfun Trusts and MASSACHUSETTS

-0.55

Correlation Coefficient

Elfun Trusts  MASSACHUSETTS

Excellent diversification

The 3 months correlation between Elfun and MASSACHUSETTS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and MASSACHUSETTS INST TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSACHUSETTS INST 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 MASSACHUSETTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSACHUSETTS INST has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and MASSACHUSETTS go up and down completely randomly.

Pair Corralation between Elfun Trusts and MASSACHUSETTS

Assuming the 90 days horizon Elfun Trusts Elfun is expected to generate 0.46 times more return on investment than MASSACHUSETTS. However, Elfun Trusts Elfun is 2.17 times less risky than MASSACHUSETTS. It trades about 0.05 of its potential returns per unit of risk. MASSACHUSETTS INST TECHNOLOGY is currently generating about 0.01 per unit of risk. If you would invest  9,505  in Elfun Trusts Elfun on September 20, 2024 and sell it today you would earn a total of  199.00  from holding Elfun Trusts Elfun or generate 2.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Elfun Trusts Elfun  vs.  MASSACHUSETTS INST TECHNOLOGY

Elfun Trusts Elfun

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Elfun Trusts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MASSACHUSETTS INST

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elfun Trusts and MASSACHUSETTS

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

The idea behind Elfun Trusts Elfun and MASSACHUSETTS INST TECHNOLOGY 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.