Correlation Between El Al and Melisron
Can any of the company-specific risk be diversified away by investing in both El Al and Melisron 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 Melisron 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 Melisron, you can compare the effects of market volatilities on El Al and Melisron 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 Melisron. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Melisron.
Diversification Opportunities for El Al and Melisron
Poor diversification
The 3 months correlation between ELAL and Melisron is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Melisron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melisron 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 Melisron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melisron has no effect on the direction of El Al i.e., El Al and Melisron go up and down completely randomly.
Pair Corralation between El Al and Melisron
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Melisron. In addition to that, El Al is 2.81 times more volatile than Melisron. It trades about -0.08 of its total potential returns per unit of risk. Melisron is currently generating about 0.3 per unit of volatility. If you would invest 2,975,000 in Melisron on September 1, 2024 and sell it today you would earn a total of 245,000 from holding Melisron or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Melisron
Performance |
| Timeline |
| El Al Israel |
| Melisron |
El Al and Melisron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Melisron
The main advantage of trading using opposite El Al and Melisron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Melisron 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 Melisron will offset losses from the drop in Melisron's long position.| El Al vs. Arad | El Al vs. Alony Hetz Properties | El Al vs. Airport City | El Al vs. Harel Insurance Investments |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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