Correlation Between E L and Clarke

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

By analyzing existing cross correlation between E L Financial Corp and Clarke Inc, you can compare the effects of market volatilities on E L and Clarke 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 Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Clarke.

Diversification Opportunities for E L and Clarke

0.11

Correlation Coefficient

E L  Clarke

Average diversification

The 3 months correlation between ELF and Clarke is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc 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 Corp are associated (or correlated) with Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of E L i.e., E L and Clarke go up and down completely randomly.

Pair Corralation between E L and Clarke

Assuming the 90 days trading horizon E L is expected to generate 1.8 times less return on investment than Clarke. In addition to that, E L is 1.37 times more volatile than Clarke Inc. It trades about 0.1 of its total potential returns per unit of risk. Clarke Inc is currently generating about 0.25 per unit of volatility. If you would invest  2,250  in Clarke Inc on April 24, 2025 and sell it today you would earn a total of  600.00  from holding Clarke Inc or generate 26.67% return on investment over 90 days.

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

E L Financial Corp  vs.  Clarke Inc

E L Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L displayed solid returns over the last few months and may actually be approaching a breakup point.

Clarke Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clarke Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Clarke displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E L and Clarke

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

The idea behind E L Financial Corp and Clarke Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.