Correlation Between Elbit Systems and Axon Enterprise
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Axon Enterprise 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 Axon Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Axon Enterprise, you can compare the effects of market volatilities on Elbit Systems and Axon Enterprise 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 Axon Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Axon Enterprise.
Diversification Opportunities for Elbit Systems and Axon Enterprise
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elbit and Axon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Axon Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axon Enterprise 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 Axon Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axon Enterprise has no effect on the direction of Elbit Systems i.e., Elbit Systems and Axon Enterprise go up and down completely randomly.
Pair Corralation between Elbit Systems and Axon Enterprise
Given the investment horizon of 90 days Elbit Systems is expected to generate 3.05 times less return on investment than Axon Enterprise. But when comparing it to its historical volatility, Elbit Systems is 2.24 times less risky than Axon Enterprise. It trades about 0.19 of its potential returns per unit of risk. Axon Enterprise is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 35,516 in Axon Enterprise on August 31, 2024 and sell it today you would earn a total of 27,980 from holding Axon Enterprise or generate 78.78% 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. Axon Enterprise
Performance |
| Timeline |
| Elbit Systems |
| Axon Enterprise |
Elbit Systems and Axon Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Axon Enterprise
The main advantage of trading using opposite Elbit Systems and Axon Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Axon Enterprise 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 Axon Enterprise will offset losses from the drop in Axon Enterprise's long position.| Elbit Systems vs. Lilium NV | Elbit Systems vs. Archer Aviation | Elbit Systems vs. Eve Holding | Elbit Systems vs. Ehang Holdings |
| Axon Enterprise vs. Novocure | Axon Enterprise vs. HubSpot | Axon Enterprise vs. DigitalOcean Holdings | Axon Enterprise vs. Appian Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |