Correlation Between El Al and Clal Industries
Can any of the company-specific risk be diversified away by investing in both El Al and Clal Industries 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 Clal Industries 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 Clal Industries and, you can compare the effects of market volatilities on El Al and Clal Industries 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 Clal Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Clal Industries.
Diversification Opportunities for El Al and Clal Industries
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELAL and Clal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries 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 Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of El Al i.e., El Al and Clal Industries go up and down completely randomly.
Pair Corralation between El Al and Clal Industries
Assuming the 90 days trading horizon El Al Israel is expected to generate 1.33 times more return on investment than Clal Industries. However, El Al is 1.33 times more volatile than Clal Industries and. It trades about 0.08 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.02 per unit of risk. If you would invest 29,548 in El Al Israel on September 3, 2024 and sell it today you would earn a total of 37,452 from holding El Al Israel or generate 126.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Clal Industries and
Performance |
| Timeline |
| El Al Israel |
| Clal Industries |
El Al and Clal Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Clal Industries
The main advantage of trading using opposite El Al and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Clal Industries 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 Clal Industries will offset losses from the drop in Clal Industries' 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 |
| Clal Industries vs. Itay Financial AA | Clal Industries vs. Bank Leumi Le Israel | Clal Industries vs. Altshuler Shaham Financial | Clal Industries vs. Millennium Food Tech LP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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