Correlation Between Elbit Systems and Matrix
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Matrix 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 Matrix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Matrix, you can compare the effects of market volatilities on Elbit Systems and Matrix 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 Matrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Matrix.
Diversification Opportunities for Elbit Systems and Matrix
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elbit and Matrix is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix 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 Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Elbit Systems i.e., Elbit Systems and Matrix go up and down completely randomly.
Pair Corralation between Elbit Systems and Matrix
Assuming the 90 days trading horizon Elbit Systems is expected to generate 1.33 times less return on investment than Matrix. In addition to that, Elbit Systems is 1.01 times more volatile than Matrix. It trades about 0.25 of its total potential returns per unit of risk. Matrix is currently generating about 0.34 per unit of volatility. If you would invest 722,900 in Matrix on August 25, 2024 and sell it today you would earn a total of 81,200 from holding Matrix or generate 11.23% 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. Matrix
Performance |
| Timeline |
| Elbit Systems |
| Matrix |
Elbit Systems and Matrix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Matrix
The main advantage of trading using opposite Elbit Systems and Matrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Matrix 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 Matrix will offset losses from the drop in Matrix'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 Transaction History module to view history of all your transactions and understand their impact on performance.
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