Correlation Between Dan Hotels and El Al
Can any of the company-specific risk be diversified away by investing in both Dan Hotels and El Al 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 Dan Hotels and El Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dan Hotels and El Al Israel, you can compare the effects of market volatilities on Dan Hotels and El Al 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 Dan Hotels with a short position of El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dan Hotels and El Al.
Diversification Opportunities for Dan Hotels and El Al
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dan and ELAL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and El Al Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Al Israel and Dan Hotels 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 Dan Hotels are associated (or correlated) with El Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Al Israel has no effect on the direction of Dan Hotels i.e., Dan Hotels and El Al go up and down completely randomly.
Pair Corralation between Dan Hotels and El Al
Assuming the 90 days trading horizon Dan Hotels is expected to under-perform the El Al. But the stock apears to be less risky and, when comparing its historical volatility, Dan Hotels is 2.84 times less risky than El Al. The stock trades about -0.03 of its potential returns per unit of risk. The El Al Israel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 44,320 in El Al Israel on September 3, 2024 and sell it today you would earn a total of 22,680 from holding El Al Israel or generate 51.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dan Hotels vs. El Al Israel
Performance |
Timeline |
Dan Hotels |
El Al Israel |
Dan Hotels and El Al Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dan Hotels and El Al
The main advantage of trading using opposite Dan Hotels and El Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels position performs unexpectedly, El Al 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 El Al will offset losses from the drop in El Al's long position.Dan Hotels vs. Clal Insurance Enterprises | Dan Hotels vs. Israel Discount Bank | Dan Hotels vs. Bezeq Israeli Telecommunication | Dan Hotels vs. Alony Hetz Properties |
El Al vs. Delek Group | El Al vs. Teva Pharmaceutical Industries | El Al vs. Fattal 1998 Holdings | El Al vs. Bank Leumi Le Israel |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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