Correlation Between Azrieli and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Azrieli and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azrieli Group and Elbit Systems, you can compare the effects of market volatilities on Azrieli and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and Elbit Systems.
Diversification Opportunities for Azrieli and Elbit Systems
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Azrieli and Elbit is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Azrieli i.e., Azrieli and Elbit Systems go up and down completely randomly.
Pair Corralation between Azrieli and Elbit Systems
Assuming the 90 days trading horizon Azrieli is expected to generate 1.07 times less return on investment than Elbit Systems. In addition to that, Azrieli is 1.29 times more volatile than Elbit Systems. It trades about 0.06 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.08 per unit of volatility. If you would invest 7,871,039 in Elbit Systems on August 25, 2024 and sell it today you would earn a total of 1,388,961 from holding Elbit Systems or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azrieli Group vs. Elbit Systems
Performance |
| Timeline |
| Azrieli Group |
| Elbit Systems |
Azrieli and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azrieli and Elbit Systems
The main advantage of trading using opposite Azrieli and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azrieli position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Azrieli vs. Israel Canada | Azrieli vs. Delek Group | Azrieli vs. Shikun Binui | Azrieli vs. Israel Discount Bank |
| Elbit Systems vs. Arad | Elbit Systems vs. Alony Hetz Properties | Elbit Systems vs. Danel | Elbit Systems vs. Airport City |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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