Correlation Between El Al and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both El Al and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on El Al and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Tower Semiconductor.
Diversification Opportunities for El Al and Tower Semiconductor
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELAL and Tower is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of El Al i.e., El Al and Tower Semiconductor go up and down completely randomly.
Pair Corralation between El Al and Tower Semiconductor
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Tower Semiconductor. In addition to that, El Al is 1.17 times more volatile than Tower Semiconductor. It trades about -0.05 of its total potential returns per unit of risk. Tower Semiconductor is currently generating about 0.07 per unit of volatility. If you would invest 1,690,000 in Tower Semiconductor on August 28, 2024 and sell it today you would earn a total of 58,000 from holding Tower Semiconductor or generate 3.43% 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. Tower Semiconductor
Performance |
| Timeline |
| El Al Israel |
| Tower Semiconductor |
El Al and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Tower Semiconductor
The main advantage of trading using opposite El Al and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor'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 |
| Tower Semiconductor vs. Teva Pharmaceutical Industries | Tower Semiconductor vs. Elbit Systems | Tower Semiconductor vs. Nice | Tower Semiconductor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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