Correlation Between Electra Co and Tadiran Hldg
Can any of the company-specific risk be diversified away by investing in both Electra Co and Tadiran Hldg 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 Electra Co and Tadiran Hldg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Co Pr and Tadiran Hldg, you can compare the effects of market volatilities on Electra Co and Tadiran Hldg 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 Electra Co with a short position of Tadiran Hldg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Co and Tadiran Hldg.
Diversification Opportunities for Electra Co and Tadiran Hldg
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electra and Tadiran is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Electra Co Pr and Tadiran Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tadiran Hldg and Electra Co 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 Electra Co Pr are associated (or correlated) with Tadiran Hldg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tadiran Hldg has no effect on the direction of Electra Co i.e., Electra Co and Tadiran Hldg go up and down completely randomly.
Pair Corralation between Electra Co and Tadiran Hldg
Assuming the 90 days trading horizon Electra Co Pr is expected to generate 1.12 times more return on investment than Tadiran Hldg. However, Electra Co is 1.12 times more volatile than Tadiran Hldg. It trades about 0.08 of its potential returns per unit of risk. Tadiran Hldg is currently generating about -0.03 per unit of risk. If you would invest 796,700 in Electra Co Pr on August 29, 2024 and sell it today you would earn a total of 153,300 from holding Electra Co Pr or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Co Pr vs. Tadiran Hldg
Performance |
| Timeline |
| Electra Co Pr |
| Tadiran Hldg |
Electra Co and Tadiran Hldg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Co and Tadiran Hldg
The main advantage of trading using opposite Electra Co and Tadiran Hldg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Co position performs unexpectedly, Tadiran Hldg 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 Tadiran Hldg will offset losses from the drop in Tadiran Hldg's long position.| Electra Co vs. Clal Insurance Enterprises | Electra Co vs. Israel Discount Bank | Electra Co vs. Bezeq Israeli Telecommunication | Electra Co vs. Alony Hetz Properties |
| Tadiran Hldg vs. Clal Insurance Enterprises | Tadiran Hldg vs. Israel Discount Bank | Tadiran Hldg vs. Bezeq Israeli Telecommunication | Tadiran Hldg vs. Alony Hetz Properties |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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