Correlation Between Airport City and Elco
Can any of the company-specific risk be diversified away by investing in both Airport City and Elco 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 Airport City and Elco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airport City and Elco, you can compare the effects of market volatilities on Airport City and Elco 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 Airport City with a short position of Elco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airport City and Elco.
Diversification Opportunities for Airport City and Elco
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airport and Elco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Airport City and Elco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elco and Airport City 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 Airport City are associated (or correlated) with Elco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elco has no effect on the direction of Airport City i.e., Airport City and Elco go up and down completely randomly.
Pair Corralation between Airport City and Elco
Assuming the 90 days trading horizon Airport City is expected to generate 1.95 times less return on investment than Elco. But when comparing it to its historical volatility, Airport City is 1.02 times less risky than Elco. It trades about 0.05 of its potential returns per unit of risk. Elco is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,055,888 in Elco on August 27, 2024 and sell it today you would earn a total of 193,112 from holding Elco or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airport City vs. Elco
Performance |
| Timeline |
| Airport City |
| Elco |
Airport City and Elco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airport City and Elco
The main advantage of trading using opposite Airport City and Elco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airport City position performs unexpectedly, Elco 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 Elco will offset losses from the drop in Elco's long position.| Airport City vs. Israel Canada | Airport City vs. Delek Group | Airport City vs. Shikun Binui | Airport City vs. Israel Discount Bank |
| Elco vs. Alony Hetz Properties | Elco vs. Electra | Elco vs. Clal Insurance Enterprises | Elco vs. Delek Automotive Systems |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |