Correlation Between Elbit Systems and Clal Biotechnology
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Clal Biotechnology 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 Systems and Clal Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Clal Biotechnology Industries, you can compare the effects of market volatilities on Elbit Systems and Clal Biotechnology 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 Systems with a short position of Clal Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Clal Biotechnology.
Diversification Opportunities for Elbit Systems and Clal Biotechnology
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elbit and Clal is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and Elbit Systems 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 Systems are associated (or correlated) with Clal Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Biotechnology has no effect on the direction of Elbit Systems i.e., Elbit Systems and Clal Biotechnology go up and down completely randomly.
Pair Corralation between Elbit Systems and Clal Biotechnology
Assuming the 90 days trading horizon Elbit Systems is expected to generate 0.78 times more return on investment than Clal Biotechnology. However, Elbit Systems is 1.28 times less risky than Clal Biotechnology. It trades about -0.02 of its potential returns per unit of risk. Clal Biotechnology Industries is currently generating about -0.09 per unit of risk. If you would invest 9,040,000 in Elbit Systems on September 13, 2024 and sell it today you would lose (70,000) from holding Elbit Systems or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. Clal Biotechnology Industries
Performance |
| Timeline |
| Elbit Systems |
| Clal Biotechnology |
Elbit Systems and Clal Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Clal Biotechnology
The main advantage of trading using opposite Elbit Systems and Clal Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Clal Biotechnology 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 Biotechnology will offset losses from the drop in Clal Biotechnology's long position.| Elbit Systems vs. Aran Research and | Elbit Systems vs. Al Bad Massuot Yitzhak | Elbit Systems vs. Analyst IMS Investment | Elbit Systems vs. Golan Plastic |
| Clal Biotechnology vs. Kamada | Clal Biotechnology vs. BioLine RX | Clal Biotechnology vs. Evogene | Clal Biotechnology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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