Correlation Between Laurentian Bank and E L

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

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

Diversification Opportunities for Laurentian Bank and E L

0.94

Correlation Coefficient

Laurentian Bank  E L

Almost no diversification

The 3 months correlation between Laurentian and ELF-PF is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and E L go up and down completely randomly.

Pair Corralation between Laurentian Bank and E L

Assuming the 90 days horizon Laurentian Bank is expected to generate 1.27 times less return on investment than E L. In addition to that, Laurentian Bank is 1.23 times more volatile than E L Financial Corp. It trades about 0.26 of its total potential returns per unit of risk. E L Financial Corp is currently generating about 0.41 per unit of volatility. If you would invest  2,231  in E L Financial Corp on April 19, 2025 and sell it today you would earn a total of  104.00  from holding E L Financial Corp or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Laurentian Bank  vs.  E L Financial Corp

Laurentian Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laurentian Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

E L Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Laurentian Bank and E L

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

The idea behind Laurentian Bank and E L Financial Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.