Correlation Between Electra and Clal Industries
Can any of the company-specific risk be diversified away by investing in both Electra and Clal Industries 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 Electra and Clal Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra and Clal Industries and, you can compare the effects of market volatilities on Electra and Clal Industries 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 Electra with a short position of Clal Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra and Clal Industries.
Diversification Opportunities for Electra and Clal Industries
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electra and Clal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Electra and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and Electra 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 Electra are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Electra i.e., Electra and Clal Industries go up and down completely randomly.
Pair Corralation between Electra and Clal Industries
Assuming the 90 days trading horizon Electra is expected to generate 1.15 times less return on investment than Clal Industries. But when comparing it to its historical volatility, Electra is 1.09 times less risky than Clal Industries. It trades about 0.02 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 204,500 in Clal Industries and on September 3, 2024 and sell it today you would earn a total of 13,400 from holding Clal Industries and or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra vs. Clal Industries and
Performance |
| Timeline |
| Electra |
| Clal Industries |
Electra and Clal Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra and Clal Industries
The main advantage of trading using opposite Electra and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra position performs unexpectedly, Clal Industries 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 Clal Industries will offset losses from the drop in Clal Industries' long position.| Electra vs. Alony Hetz Properties | Electra vs. Melisron | Electra vs. Shufersal | Electra vs. Israel Discount Bank |
| Clal Industries vs. Itay Financial AA | Clal Industries vs. Bank Leumi Le Israel | Clal Industries vs. Altshuler Shaham Financial | Clal Industries vs. Millennium Food Tech LP |
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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