Correlation Between Elbit Systems and Kamada
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Kamada 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 Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Kamada, you can compare the effects of market volatilities on Elbit Systems and Kamada 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 Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Kamada.
Diversification Opportunities for Elbit Systems and Kamada
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elbit and Kamada is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada 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 Kamada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamada has no effect on the direction of Elbit Systems i.e., Elbit Systems and Kamada go up and down completely randomly.
Pair Corralation between Elbit Systems and Kamada
Assuming the 90 days trading horizon Elbit Systems is expected to generate 1.05 times more return on investment than Kamada. However, Elbit Systems is 1.05 times more volatile than Kamada. It trades about 0.24 of its potential returns per unit of risk. Kamada is currently generating about 0.16 per unit of risk. If you would invest 8,556,000 in Elbit Systems on August 29, 2024 and sell it today you would earn a total of 714,000 from holding Elbit Systems or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Elbit Systems vs. Kamada
Performance |
| Timeline |
| Elbit Systems |
| Kamada |
Elbit Systems and Kamada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Kamada
The main advantage of trading using opposite Elbit Systems and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Kamada 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 Kamada will offset losses from the drop in Kamada'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 |
| Kamada vs. Lifecore Biomedical | Kamada vs. Shuttle Pharmaceuticals | Kamada vs. Cumberland Pharmaceuticals | Kamada vs. Ironwood Pharmaceuticals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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