Correlation Between Eldav L and Summit
Can any of the company-specific risk be diversified away by investing in both Eldav L and Summit 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 Eldav L and Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eldav L and Summit, you can compare the effects of market volatilities on Eldav L and Summit 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 Eldav L with a short position of Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldav L and Summit.
Diversification Opportunities for Eldav L and Summit
Poor diversification
The 3 months correlation between Eldav and Summit is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eldav L and Summit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit and Eldav L 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 Eldav L are associated (or correlated) with Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit has no effect on the direction of Eldav L i.e., Eldav L and Summit go up and down completely randomly.
Pair Corralation between Eldav L and Summit
Assuming the 90 days trading horizon Eldav L is expected to generate 1.87 times less return on investment than Summit. But when comparing it to its historical volatility, Eldav L is 1.12 times less risky than Summit. It trades about 0.03 of its potential returns per unit of risk. Summit is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 582,400 in Summit on August 29, 2024 and sell it today you would earn a total of 11,600 from holding Summit or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldav L vs. Summit
Performance |
| Timeline |
| Eldav L |
| Summit |
Eldav L and Summit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldav L and Summit
The main advantage of trading using opposite Eldav L and Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldav L position performs unexpectedly, Summit 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 Summit will offset losses from the drop in Summit's long position.| Eldav L vs. SR Accord | Eldav L vs. Rapac Communication Infrastructure | Eldav L vs. Nextcom | Eldav L vs. EN Shoham Business |
| Summit vs. Israel Canada | Summit vs. Delek Group | Summit vs. Shikun Binui | Summit vs. Israel Discount Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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