Correlation Between Elbit Systems and Elron Electronic
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Elron Electronic 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 Elron Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Elron Electronic Industries, you can compare the effects of market volatilities on Elbit Systems and Elron Electronic 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 Elron Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Elron Electronic.
Diversification Opportunities for Elbit Systems and Elron Electronic
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elbit and Elron is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Elron Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elron Electronic Ind 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 Elron Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elron Electronic Ind has no effect on the direction of Elbit Systems i.e., Elbit Systems and Elron Electronic go up and down completely randomly.
Pair Corralation between Elbit Systems and Elron Electronic
Assuming the 90 days trading horizon Elbit Systems is expected to generate 1.43 times more return on investment than Elron Electronic. However, Elbit Systems is 1.43 times more volatile than Elron Electronic Industries. It trades about 0.17 of its potential returns per unit of risk. Elron Electronic Industries is currently generating about 0.04 per unit of risk. If you would invest 739,969 in Elbit Systems on November 19, 2024 and sell it today you would earn a total of 9,958,031 from holding Elbit Systems or generate 1345.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. Elron Electronic Industries
Performance |
| Timeline |
| Elbit Systems |
| Elron Electronic Ind |
Elbit Systems and Elron Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Elron Electronic
The main advantage of trading using opposite Elbit Systems and Elron Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Elron Electronic 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 Elron Electronic will offset losses from the drop in Elron Electronic's long position.| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
| Elron Electronic vs. Elbit Systems | Elron Electronic vs. Discount Investment Corp | Elron Electronic vs. Clal Insurance Enterprises | Elron Electronic vs. AudioCodes |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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