Correlation Between El Al and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both El Al and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings, you can compare the effects of market volatilities on El Al and Kenon Holdings 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 Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Kenon Holdings.
Diversification Opportunities for El Al and Kenon Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELAL and Kenon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings 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 Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of El Al i.e., El Al and Kenon Holdings go up and down completely randomly.
Pair Corralation between El Al and Kenon Holdings
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Kenon Holdings. In addition to that, El Al is 2.02 times more volatile than Kenon Holdings. It trades about -0.15 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.11 per unit of volatility. If you would invest 1,044,000 in Kenon Holdings on August 29, 2024 and sell it today you would earn a total of 42,000 from holding Kenon Holdings or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Kenon Holdings
Performance |
| Timeline |
| El Al Israel |
| Kenon Holdings |
El Al and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Kenon Holdings
The main advantage of trading using opposite El Al and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' 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 |
| Kenon Holdings vs. ICL Israel Chemicals | Kenon Holdings vs. Tower Semiconductor | Kenon Holdings vs. Israel Corp | Kenon Holdings vs. Nova |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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