Correlation Between Elco and Blue Square
Can any of the company-specific risk be diversified away by investing in both Elco and Blue Square 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 Elco and Blue Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elco and Blue Square Real, you can compare the effects of market volatilities on Elco and Blue Square 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 Elco with a short position of Blue Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elco and Blue Square.
Diversification Opportunities for Elco and Blue Square
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elco and Blue is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Elco and Blue Square Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Square Real and Elco 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 Elco are associated (or correlated) with Blue Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Square Real has no effect on the direction of Elco i.e., Elco and Blue Square go up and down completely randomly.
Pair Corralation between Elco and Blue Square
Assuming the 90 days trading horizon Elco is expected to generate 3.47 times less return on investment than Blue Square. But when comparing it to its historical volatility, Elco is 1.31 times less risky than Blue Square. It trades about 0.06 of its potential returns per unit of risk. Blue Square Real is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,200,000 in Blue Square Real on November 28, 2024 and sell it today you would earn a total of 225,000 from holding Blue Square Real or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Elco vs. Blue Square Real
Performance |
| Timeline |
| Elco |
| Blue Square Real |
Elco and Blue Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elco and Blue Square
The main advantage of trading using opposite Elco and Blue Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elco position performs unexpectedly, Blue Square 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 Blue Square will offset losses from the drop in Blue Square's long position.| Elco vs. Alony Hetz Properties | Elco vs. Electra | Elco vs. Clal Insurance Enterprises | Elco vs. Delek Automotive Systems |
| Blue Square vs. Amot Investments | Blue Square vs. Big Shopping Centers | Blue Square vs. Alony Hetz Properties | Blue Square vs. Melisron |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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