Correlation Between El Al and ES Australia
Can any of the company-specific risk be diversified away by investing in both El Al and ES Australia 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 El Al and ES Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Al Israel and ES Australia Israel, you can compare the effects of market volatilities on El Al and ES Australia 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 El Al with a short position of ES Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and ES Australia.
Diversification Opportunities for El Al and ES Australia
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ELAL and AUIS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and ES Australia Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Australia Israel and El Al 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 El Al Israel are associated (or correlated) with ES Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Australia Israel has no effect on the direction of El Al i.e., El Al and ES Australia go up and down completely randomly.
Pair Corralation between El Al and ES Australia
Assuming the 90 days trading horizon El Al Israel is expected to generate 1.27 times more return on investment than ES Australia. However, El Al is 1.27 times more volatile than ES Australia Israel. It trades about 0.08 of its potential returns per unit of risk. ES Australia Israel is currently generating about -0.09 per unit of risk. If you would invest 52,960 in El Al Israel on September 3, 2024 and sell it today you would earn a total of 14,040 from holding El Al Israel or generate 26.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. ES Australia Israel
Performance |
| Timeline |
| El Al Israel |
| ES Australia Israel |
El Al and ES Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and ES Australia
The main advantage of trading using opposite El Al and ES Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, ES Australia 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 ES Australia will offset losses from the drop in ES Australia's long position.| El Al vs. Delek Group | El Al vs. Teva Pharmaceutical Industries | El Al vs. Fattal 1998 Holdings | El Al vs. Bank Leumi Le Israel |
| ES Australia vs. Unicorn Technologies | ES Australia vs. Israel China Biotechnology | ES Australia vs. Ormat Technologies | ES Australia vs. Computer Direct |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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