Correlation Between Elbit Systems and Gold Bond
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Gold Bond 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 Gold Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and The Gold Bond, you can compare the effects of market volatilities on Elbit Systems and Gold Bond 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 Gold Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Gold Bond.
Diversification Opportunities for Elbit Systems and Gold Bond
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elbit and Gold is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond 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 Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of Elbit Systems i.e., Elbit Systems and Gold Bond go up and down completely randomly.
Pair Corralation between Elbit Systems and Gold Bond
Assuming the 90 days trading horizon Elbit Systems is expected to generate 2.17 times more return on investment than Gold Bond. However, Elbit Systems is 2.17 times more volatile than The Gold Bond. It trades about 0.17 of its potential returns per unit of risk. The Gold Bond is currently generating about 0.05 per unit of risk. If you would invest 749,885 in Elbit Systems on December 1, 2024 and sell it today you would earn a total of 10,202,115 from holding Elbit Systems or generate 1360.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. The Gold Bond
Performance |
| Timeline |
| Elbit Systems |
| Gold Bond |
Elbit Systems and Gold Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Gold Bond
The main advantage of trading using opposite Elbit Systems and Gold Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Gold Bond 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 Gold Bond will offset losses from the drop in Gold Bond's long position.| Elbit Systems vs. Nice | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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