Correlation Between E L and Power
Can any of the company-specific risk be diversified away by investing in both E L and Power 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 E L and Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial 3 and Power, you can compare the effects of market volatilities on E L and Power 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 E L with a short position of Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Power.
Diversification Opportunities for E L and Power
Very poor diversification
The 3 months correlation between ELF-PH and Power is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power and E L 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 E L Financial 3 are associated (or correlated) with Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power has no effect on the direction of E L i.e., E L and Power go up and down completely randomly.
Pair Corralation between E L and Power
Assuming the 90 days trading horizon E L is expected to generate 4.12 times less return on investment than Power. But when comparing it to its historical volatility, E L Financial 3 is 2.2 times less risky than Power. It trades about 0.09 of its potential returns per unit of risk. Power is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,063 in Power on August 21, 2025 and sell it today you would earn a total of 2,768 from holding Power or generate 68.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial 3 vs. Power
Performance |
| Timeline |
| E L Financial |
| Power |
E L and Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Power
The main advantage of trading using opposite E L and Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L position performs unexpectedly, Power 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 Power will offset losses from the drop in Power's long position.| E L vs. Quorum Information Technologies | E L vs. Hampton Financial Corp | E L vs. Pond Technologies Holdings | E L vs. CHAR Technologies |
| Power vs. Great West Lifeco | Power vs. Manulife Financial Corp | Power vs. Power Financial Corp | Power vs. Sun Life Financial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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