Correlation Between El Al and Knafaim
Can any of the company-specific risk be diversified away by investing in both El Al and Knafaim 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 Knafaim 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 Knafaim, you can compare the effects of market volatilities on El Al and Knafaim 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 Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Knafaim.
Diversification Opportunities for El Al and Knafaim
Almost no diversification
The 3 months correlation between ELAL and Knafaim is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim 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 Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of El Al i.e., El Al and Knafaim go up and down completely randomly.
Pair Corralation between El Al and Knafaim
Assuming the 90 days trading horizon El Al Israel is expected to generate 1.47 times more return on investment than Knafaim. However, El Al is 1.47 times more volatile than Knafaim. It trades about 0.08 of its potential returns per unit of risk. Knafaim is currently generating about 0.08 per unit of risk. If you would invest 30,234 in El Al Israel on August 29, 2024 and sell it today you would earn a total of 40,166 from holding El Al Israel or generate 132.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Knafaim
Performance |
| Timeline |
| El Al Israel |
| Knafaim |
El Al and Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Knafaim
The main advantage of trading using opposite El Al and Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Knafaim 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 Knafaim will offset losses from the drop in Knafaim'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 |
| Knafaim vs. El Al Israel | Knafaim vs. Melisron | Knafaim vs. Global Knafaim Leasing | Knafaim vs. Bezeq Israeli Telecommunication |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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