Correlation Between Element Fleet and NeuPath Health

Can any of the company-specific risk be diversified away by investing in both Element Fleet and NeuPath Health 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 NeuPath Health 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 NeuPath Health, you can compare the effects of market volatilities on Element Fleet and NeuPath Health 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 NeuPath Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and NeuPath Health.

Diversification Opportunities for Element Fleet and NeuPath Health

0.78

Correlation Coefficient

Element Fleet  NeuPath Health

Poor diversification

The 3 months correlation between Element and NeuPath is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and NeuPath Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuPath Health 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 NeuPath Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuPath Health has no effect on the direction of Element Fleet i.e., Element Fleet and NeuPath Health go up and down completely randomly.

Pair Corralation between Element Fleet and NeuPath Health

Assuming the 90 days trading horizon Element Fleet is expected to generate 2.19 times less return on investment than NeuPath Health. But when comparing it to its historical volatility, Element Fleet Management is 3.45 times less risky than NeuPath Health. It trades about 0.27 of its potential returns per unit of risk. NeuPath Health is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  19.00  in NeuPath Health on April 23, 2025 and sell it today you would earn a total of  7.00  from holding NeuPath Health or generate 36.84% return on investment over 90 days.

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

Element Fleet Management  vs.  NeuPath Health

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 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Element Fleet displayed solid returns over the last few months and may actually be approaching a breakup point.

NeuPath Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NeuPath Health are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NeuPath Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Element Fleet and NeuPath Health

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

The idea behind Element Fleet Management and NeuPath Health 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.