Correlation Between Elbit Medical and Israel Land
Can any of the company-specific risk be diversified away by investing in both Elbit Medical and Israel Land 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 Elbit Medical and Israel Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Medical Technologies and The Israel Land, you can compare the effects of market volatilities on Elbit Medical and Israel Land 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 Elbit Medical with a short position of Israel Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Medical and Israel Land.
Diversification Opportunities for Elbit Medical and Israel Land
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elbit and Israel is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Medical Technologies and The Israel Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land and Elbit Medical 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 Elbit Medical Technologies are associated (or correlated) with Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land has no effect on the direction of Elbit Medical i.e., Elbit Medical and Israel Land go up and down completely randomly.
Pair Corralation between Elbit Medical and Israel Land
Assuming the 90 days trading horizon Elbit Medical Technologies is expected to under-perform the Israel Land. In addition to that, Elbit Medical is 2.01 times more volatile than The Israel Land. It trades about -0.01 of its total potential returns per unit of risk. The Israel Land is currently generating about 0.09 per unit of volatility. If you would invest 60,540 in The Israel Land on September 1, 2024 and sell it today you would earn a total of 24,450 from holding The Israel Land or generate 40.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Medical Technologies vs. The Israel Land
Performance |
| Timeline |
| Elbit Medical Techno |
| Israel Land |
Elbit Medical and Israel Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Medical and Israel Land
The main advantage of trading using opposite Elbit Medical and Israel Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Medical position performs unexpectedly, Israel Land 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 Israel Land will offset losses from the drop in Israel Land's long position.| Elbit Medical vs. Nice | Elbit Medical vs. The Gold Bond | Elbit Medical vs. Bank Leumi Le Israel | Elbit Medical vs. ICL Israel Chemicals |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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