Correlation Between Elfun Government and Large Cap
Can any of the company-specific risk be diversified away by investing in both Elfun Government and Large Cap 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 Government and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Large Cap Value, you can compare the effects of market volatilities on Elfun Government and Large Cap 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 Government with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Large Cap.
Diversification Opportunities for Elfun Government and Large Cap
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elfun and Large is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value and Elfun Government 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 Government Money are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Elfun Government i.e., Elfun Government and Large Cap go up and down completely randomly.
Pair Corralation between Elfun Government and Large Cap
Assuming the 90 days horizon Elfun Government is expected to generate 13.11 times less return on investment than Large Cap. But when comparing it to its historical volatility, Elfun Government Money is 5.63 times less risky than Large Cap. It trades about 0.13 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,626 in Large Cap Value on April 26, 2025 and sell it today you would earn a total of 216.00 from holding Large Cap Value or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Elfun Government Money vs. Large Cap Value
Performance |
| Timeline |
| Elfun Government Money |
| Large Cap Value |
Elfun Government and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Government and Large Cap
The main advantage of trading using opposite Elfun Government and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Elfun Government vs. Needham Aggressive Growth | Elfun Government vs. Morningstar Growth Etf | Elfun Government vs. Pace Large Growth | Elfun Government vs. Tfa Alphagen Growth |
| Large Cap vs. Nuveen Santa Barbara | Large Cap vs. Ab Global Risk | Large Cap vs. Qs Global Equity | Large Cap vs. Calvert Global Energy |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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