Correlation Between Discount Investment and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Discount Investment 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 Discount Investment and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discount Investment Corp and Elbit Systems, you can compare the effects of market volatilities on Discount Investment 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 Discount Investment with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and Elbit Systems.
Diversification Opportunities for Discount Investment and Elbit Systems
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Discount and Elbit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Discount Investment 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 Discount Investment Corp 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 Discount Investment i.e., Discount Investment and Elbit Systems go up and down completely randomly.
Pair Corralation between Discount Investment and Elbit Systems
Assuming the 90 days trading horizon Discount Investment Corp is expected to generate 1.65 times more return on investment than Elbit Systems. However, Discount Investment is 1.65 times more volatile than Elbit Systems. It trades about 0.17 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.09 per unit of risk. If you would invest 42,550 in Discount Investment Corp on September 1, 2024 and sell it today you would earn a total of 4,220 from holding Discount Investment Corp or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. Elbit Systems
Performance |
| Timeline |
| Discount Investment Corp |
| Elbit Systems |
Discount Investment and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and Elbit Systems
The main advantage of trading using opposite Discount Investment and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment 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.| Discount Investment vs. Clal Insurance Enterprises | Discount Investment vs. Israel Discount Bank | Discount Investment vs. Migdal Insurance | Discount Investment vs. Bezeq Israeli Telecommunication |
| Elbit Systems vs. Arad | Elbit Systems vs. Alony Hetz Properties | Elbit Systems vs. Airport City | Elbit Systems vs. Harel Insurance Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |