Correlation Between Richelieu Hardware and E L

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

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

Diversification Opportunities for Richelieu Hardware and E L

0.84

Correlation Coefficient

Richelieu Hardware  E L

Very poor diversification

The 3 months correlation between Richelieu and ELF-PF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware i.e., Richelieu Hardware and E L go up and down completely randomly.

Pair Corralation between Richelieu Hardware and E L

Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 1.21 times less return on investment than E L. In addition to that, Richelieu Hardware is 3.16 times more volatile than E L Financial Corp. It trades about 0.08 of its total potential returns per unit of risk. E L Financial Corp is currently generating about 0.32 per unit of volatility. If you would invest  2,118  in E L Financial Corp on April 20, 2025 and sell it today you would earn a total of  217.00  from holding E L Financial Corp or generate 10.25% return on investment over 90 days.

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

Richelieu Hardware  vs.  E L Financial Corp

Richelieu Hardware

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Richelieu Hardware are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Richelieu Hardware may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 abnormal 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 Richelieu Hardware and E L

The main advantage of trading using opposite Richelieu Hardware and E L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware 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 Richelieu Hardware 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.