Correlation Between Elbit Systems and E M
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and E M 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 E M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and E M Computing, you can compare the effects of market volatilities on Elbit Systems and E M 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 E M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and E M.
Diversification Opportunities for Elbit Systems and E M
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elbit and EMCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and E M Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E M Computing 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 E M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E M Computing has no effect on the direction of Elbit Systems i.e., Elbit Systems and E M go up and down completely randomly.
Pair Corralation between Elbit Systems and E M
Assuming the 90 days trading horizon Elbit Systems is expected to generate 2.41 times more return on investment than E M. However, Elbit Systems is 2.41 times more volatile than E M Computing. It trades about 0.18 of its potential returns per unit of risk. E M Computing is currently generating about 0.06 per unit of risk. If you would invest 2,738,525 in Elbit Systems on December 2, 2024 and sell it today you would earn a total of 8,213,475 from holding Elbit Systems or generate 299.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. E M Computing
Performance |
| Timeline |
| Elbit Systems |
| E M Computing |
Elbit Systems and E M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and E M
The main advantage of trading using opposite Elbit Systems and E M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, E M 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 E M will offset losses from the drop in E M'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 |
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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