Correlation Between Israel Discount and Elbit Medical
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Elbit Medical 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 Elbit Medical 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 Elbit Medical Technologies, you can compare the effects of market volatilities on Israel Discount and Elbit Medical 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 Elbit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Elbit Medical.
Diversification Opportunities for Israel Discount and Elbit Medical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and Elbit is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Elbit Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Medical Techno 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 Elbit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Medical Techno has no effect on the direction of Israel Discount i.e., Israel Discount and Elbit Medical go up and down completely randomly.
Pair Corralation between Israel Discount and Elbit Medical
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.25 times more return on investment than Elbit Medical. However, Israel Discount Bank is 3.96 times less risky than Elbit Medical. It trades about 0.65 of its potential returns per unit of risk. Elbit Medical Technologies is currently generating about -0.14 per unit of risk. If you would invest 217,000 in Israel Discount Bank on August 30, 2024 and sell it today you would earn a total of 28,000 from holding Israel Discount Bank or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Israel Discount Bank vs. Elbit Medical Technologies
Performance |
| Timeline |
| Israel Discount Bank |
| Elbit Medical Techno |
Israel Discount and Elbit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Elbit Medical
The main advantage of trading using opposite Israel Discount and Elbit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Elbit Medical 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 Medical will offset losses from the drop in Elbit Medical's long position.| Israel Discount vs. Elbit Systems | Israel Discount vs. Discount Investment Corp | Israel Discount vs. AudioCodes | Israel Discount vs. Shufersal |
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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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