Correlation Between Elbit Systems and Trendline
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Trendline 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 Trendline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Trendline, you can compare the effects of market volatilities on Elbit Systems and Trendline 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 Trendline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Trendline.
Diversification Opportunities for Elbit Systems and Trendline
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elbit and Trendline is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Trendline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trendline 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 Trendline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trendline has no effect on the direction of Elbit Systems i.e., Elbit Systems and Trendline go up and down completely randomly.
Pair Corralation between Elbit Systems and Trendline
Assuming the 90 days trading horizon Elbit Systems is expected to generate 0.74 times more return on investment than Trendline. However, Elbit Systems is 1.36 times less risky than Trendline. It trades about 0.02 of its potential returns per unit of risk. Trendline is currently generating about -0.19 per unit of risk. If you would invest 8,870,000 in Elbit Systems on September 6, 2024 and sell it today you would earn a total of 50,000 from holding Elbit Systems or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Elbit Systems vs. Trendline
Performance |
| Timeline |
| Elbit Systems |
| Trendline |
Elbit Systems and Trendline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Trendline
The main advantage of trading using opposite Elbit Systems and Trendline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Trendline 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 Trendline will offset losses from the drop in Trendline'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 |
| Trendline vs. Sarine Technologies | Trendline vs. One Software Technologies | Trendline vs. Bezeq Israeli Telecommunication | Trendline vs. Priortech |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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