Correlation Between Element Fleet and IBC Advanced

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

By analyzing existing cross correlation between Element Fleet Management and IBC Advanced Alloys, you can compare the effects of market volatilities on Element Fleet and IBC Advanced 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 Element Fleet with a short position of IBC Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and IBC Advanced.

Diversification Opportunities for Element Fleet and IBC Advanced

0.59

Correlation Coefficient

Element Fleet  IBC Advanced

Very weak diversification

The 3 months correlation between Element and IBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and IBC Advanced Alloys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBC Advanced Alloys and Element Fleet 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 Element Fleet Management are associated (or correlated) with IBC Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBC Advanced Alloys has no effect on the direction of Element Fleet i.e., Element Fleet and IBC Advanced go up and down completely randomly.

Pair Corralation between Element Fleet and IBC Advanced

Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.02 times more return on investment than IBC Advanced. However, Element Fleet Management is 46.64 times less risky than IBC Advanced. It trades about 0.01 of its potential returns per unit of risk. IBC Advanced Alloys is currently generating about -0.04 per unit of risk. If you would invest  2,499  in Element Fleet Management on January 31, 2024 and sell it today you would earn a total of  1.00  from holding Element Fleet Management or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Element Fleet Management  vs.  IBC Advanced Alloys

Element Fleet Management

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

IBC Advanced Alloys

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBC Advanced Alloys are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, IBC Advanced showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Element Fleet and IBC Advanced

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

The idea behind Element Fleet Management and IBC Advanced Alloys 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..