Correlation Between El Al and Dan Hotels
Can any of the company-specific risk be diversified away by investing in both El Al and Dan Hotels 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 Dan Hotels 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 Dan Hotels, you can compare the effects of market volatilities on El Al and Dan Hotels 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 Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Dan Hotels.
Diversification Opportunities for El Al and Dan Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELAL and Dan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels 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 Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of El Al i.e., El Al and Dan Hotels go up and down completely randomly.
Pair Corralation between El Al and Dan Hotels
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Dan Hotels. In addition to that, El Al is 2.76 times more volatile than Dan Hotels. It trades about -0.08 of its total potential returns per unit of risk. Dan Hotels is currently generating about -0.1 per unit of volatility. If you would invest 231,800 in Dan Hotels on September 1, 2024 and sell it today you would lose (6,800) from holding Dan Hotels or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Dan Hotels
Performance |
| Timeline |
| El Al Israel |
| Dan Hotels |
El Al and Dan Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Dan Hotels
The main advantage of trading using opposite El Al and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Dan Hotels 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 Dan Hotels will offset losses from the drop in Dan Hotels' long position.| El Al vs. Arad | El Al vs. Alony Hetz Properties | El Al vs. Airport City | El Al vs. Harel Insurance Investments |
| Dan Hotels vs. El Al Israel | Dan Hotels vs. Magic Software Enterprises | Dan Hotels vs. Neto Malinda | Dan Hotels vs. Orbit Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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