Correlation Between Israel Discount and El Al
Can any of the company-specific risk be diversified away by investing in both Israel Discount 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 Israel Discount and El Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and El Al Israel, you can compare the effects of market volatilities on Israel Discount 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 Israel Discount with a short position of El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and El Al.
Diversification Opportunities for Israel Discount and El Al
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and ELAL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank 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 Israel Discount 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 Israel Discount Bank 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 Israel Discount i.e., Israel Discount and El Al go up and down completely randomly.
Pair Corralation between Israel Discount and El Al
Assuming the 90 days trading horizon Israel Discount is expected to generate 2.92 times less return on investment than El Al. But when comparing it to its historical volatility, Israel Discount Bank is 1.76 times less risky than El Al. It trades about 0.05 of its potential returns per unit of risk. El Al Israel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 30,234 in El Al Israel on August 29, 2024 and sell it today you would earn a total of 40,166 from holding El Al Israel or generate 132.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. El Al Israel
Performance |
| Timeline |
| Israel Discount Bank |
| El Al Israel |
Israel Discount and El Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and El Al
The main advantage of trading using opposite Israel Discount and El Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount 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.| Israel Discount vs. Elbit Systems | Israel Discount vs. Discount Investment Corp | Israel Discount vs. Clal Insurance Enterprises | Israel Discount vs. AudioCodes |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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