Correlation Between Tree Island and Element Fleet

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

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

Diversification Opportunities for Tree Island and Element Fleet

-0.06

Correlation Coefficient

Tree Island  Element Fleet

Good diversification

The 3 months correlation between Tree and Element is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and Element Fleet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Fleet Management and Tree Island 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 Tree Island Steel are associated (or correlated) with Element Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Fleet Management has no effect on the direction of Tree Island i.e., Tree Island and Element Fleet go up and down completely randomly.

Pair Corralation between Tree Island and Element Fleet

Assuming the 90 days trading horizon Tree Island Steel is expected to under-perform the Element Fleet. In addition to that, Tree Island is 1.88 times more volatile than Element Fleet Management. It trades about -0.08 of its total potential returns per unit of risk. Element Fleet Management is currently generating about 0.31 per unit of volatility. If you would invest  3,078  in Element Fleet Management on May 3, 2025 and sell it today you would earn a total of  526.00  from holding Element Fleet Management or generate 17.09% return on investment over 90 days.

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

Tree Island Steel  vs.  Element Fleet Management

Tree Island Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tree Island Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Element Fleet Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Element Fleet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tree Island and Element Fleet

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

The idea behind Tree Island Steel and Element Fleet Management 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.