Correlation Between Azrieli and Elco
Can any of the company-specific risk be diversified away by investing in both Azrieli 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 Azrieli and Elco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azrieli Group and Elco, you can compare the effects of market volatilities on Azrieli 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 Azrieli with a short position of Elco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and Elco.
Diversification Opportunities for Azrieli and Elco
Very good diversification
The 3 months correlation between Azrieli and Elco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Elco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elco and Azrieli 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 Azrieli Group 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 Azrieli i.e., Azrieli and Elco go up and down completely randomly.
Pair Corralation between Azrieli and Elco
Assuming the 90 days trading horizon Azrieli is expected to generate 2.54 times less return on investment than Elco. But when comparing it to its historical volatility, Azrieli Group is 1.51 times less risky than Elco. It trades about 0.25 of its potential returns per unit of risk. Elco is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,057,000 in Elco on October 22, 2024 and sell it today you would earn a total of 539,000 from holding Elco or generate 50.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azrieli Group vs. Elco
Performance |
| Timeline |
| Azrieli Group |
| Elco |
Azrieli and Elco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azrieli and Elco
The main advantage of trading using opposite Azrieli and Elco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azrieli 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.| Azrieli vs. Melisron | Azrieli vs. Bank Leumi Le Israel | Azrieli vs. Bank Hapoalim | Azrieli vs. Amot Investments |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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