Correlation Between Great Elm and PhenixFIN 525

Can any of the company-specific risk be diversified away by investing in both Great Elm and PhenixFIN 525 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 Great Elm and PhenixFIN 525 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Elm Capital and PhenixFIN 525, you can compare the effects of market volatilities on Great Elm and PhenixFIN 525 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 Great Elm with a short position of PhenixFIN 525. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and PhenixFIN 525.

Diversification Opportunities for Great Elm and PhenixFIN 525

0.58

Correlation Coefficient

Great Elm  PhenixFIN 525

Very weak diversification

The 3 months correlation between Great and PhenixFIN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and PhenixFIN 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PhenixFIN 525 and Great Elm 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 Great Elm Capital are associated (or correlated) with PhenixFIN 525. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PhenixFIN 525 has no effect on the direction of Great Elm i.e., Great Elm and PhenixFIN 525 go up and down completely randomly.

Pair Corralation between Great Elm and PhenixFIN 525

Assuming the 90 days horizon Great Elm is expected to generate 1.41 times less return on investment than PhenixFIN 525. But when comparing it to its historical volatility, Great Elm Capital is 1.26 times less risky than PhenixFIN 525. It trades about 0.12 of its potential returns per unit of risk. PhenixFIN 525 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,180  in PhenixFIN 525 on September 18, 2024 and sell it today you would earn a total of  107.00  from holding PhenixFIN 525 or generate 4.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Great Elm Capital  vs.  PhenixFIN 525

Great Elm Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PhenixFIN 525

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PhenixFIN 525 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PhenixFIN 525 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Great Elm and PhenixFIN 525

The main advantage of trading using opposite Great Elm and PhenixFIN 525 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, PhenixFIN 525 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 PhenixFIN 525 will offset losses from the drop in PhenixFIN 525's long position.

The idea behind Great Elm Capital and PhenixFIN 525 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.