Correlation Between El Al and Mivtach Shamir
Can any of the company-specific risk be diversified away by investing in both El Al and Mivtach Shamir 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 Mivtach Shamir 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 Mivtach Shamir, you can compare the effects of market volatilities on El Al and Mivtach Shamir 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 Mivtach Shamir. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Mivtach Shamir.
Diversification Opportunities for El Al and Mivtach Shamir
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELAL and Mivtach is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Mivtach Shamir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivtach Shamir 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 Mivtach Shamir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivtach Shamir has no effect on the direction of El Al i.e., El Al and Mivtach Shamir go up and down completely randomly.
Pair Corralation between El Al and Mivtach Shamir
Assuming the 90 days trading horizon El Al Israel is expected to generate 1.94 times more return on investment than Mivtach Shamir. However, El Al is 1.94 times more volatile than Mivtach Shamir. It trades about -0.08 of its potential returns per unit of risk. Mivtach Shamir is currently generating about -0.21 per unit of risk. If you would invest 72,620 in El Al Israel on September 1, 2024 and sell it today you would lose (5,620) from holding El Al Israel or give up 7.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Mivtach Shamir
Performance |
| Timeline |
| El Al Israel |
| Mivtach Shamir |
El Al and Mivtach Shamir Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Mivtach Shamir
The main advantage of trading using opposite El Al and Mivtach Shamir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Mivtach Shamir 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 Mivtach Shamir will offset losses from the drop in Mivtach Shamir's long position.| El Al vs. Arad | El Al vs. Alony Hetz Properties | El Al vs. Airport City | El Al vs. Harel Insurance Investments |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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