Correlation Between El Pollo and Clovis Oncology

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

By analyzing existing cross correlation between El Pollo Loco and Clovis Oncology, you can compare the effects of market volatilities on El Pollo and Clovis Oncology 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 El Pollo with a short position of Clovis Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Pollo and Clovis Oncology.

Diversification Opportunities for El Pollo and Clovis Oncology

-0.17

Correlation Coefficient

El Pollo  Clovis Oncology

Good diversification

The 3 months correlation between LOCO and Clovis is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and Clovis Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clovis Oncology and El Pollo 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 El Pollo Loco are associated (or correlated) with Clovis Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clovis Oncology has no effect on the direction of El Pollo i.e., El Pollo and Clovis Oncology go up and down completely randomly.

Pair Corralation between El Pollo and Clovis Oncology

If you would invest  906.00  in El Pollo Loco on February 29, 2024 and sell it today you would earn a total of  140.00  from holding El Pollo Loco or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

El Pollo Loco  vs.  Clovis Oncology

El Pollo Loco

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Pollo Loco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, El Pollo displayed solid returns over the last few months and may actually be approaching a breakup point.

Clovis Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clovis Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clovis Oncology is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with El Pollo and Clovis Oncology

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

The idea behind El Pollo Loco and Clovis Oncology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.