Correlation Between B Communications and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both B Communications 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 B Communications and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Elbit Systems, you can compare the effects of market volatilities on B Communications 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 B Communications with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Elbit Systems.
Diversification Opportunities for B Communications and Elbit Systems
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCOM and Elbit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and B Communications 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 B Communications 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 B Communications i.e., B Communications and Elbit Systems go up and down completely randomly.
Pair Corralation between B Communications and Elbit Systems
Assuming the 90 days trading horizon B Communications is expected to generate 1.66 times more return on investment than Elbit Systems. However, B Communications is 1.66 times more volatile than Elbit Systems. It trades about 0.07 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.04 per unit of risk. If you would invest 110,000 in B Communications on September 2, 2024 and sell it today you would earn a total of 57,000 from holding B Communications or generate 51.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Elbit Systems
Performance |
| Timeline |
| B Communications |
| Elbit Systems |
B Communications and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Elbit Systems
The main advantage of trading using opposite B Communications and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications 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.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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