Correlation Between Elbit Systems and New Horizon
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and New Horizon 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 New Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and New Horizon Aircraft, you can compare the effects of market volatilities on Elbit Systems and New Horizon 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 New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and New Horizon.
Diversification Opportunities for Elbit Systems and New Horizon
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elbit and New is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Elbit Systems i.e., Elbit Systems and New Horizon go up and down completely randomly.
Pair Corralation between Elbit Systems and New Horizon
Given the investment horizon of 90 days Elbit Systems is expected to generate 0.17 times more return on investment than New Horizon. However, Elbit Systems is 5.83 times less risky than New Horizon. It trades about 0.06 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.04 per unit of risk. If you would invest 16,782 in Elbit Systems on August 30, 2024 and sell it today you would earn a total of 7,673 from holding Elbit Systems or generate 45.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.48% |
| Values | Daily Returns |
Elbit Systems vs. New Horizon Aircraft
Performance |
| Timeline |
| Elbit Systems |
| New Horizon Aircraft |
Elbit Systems and New Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and New Horizon
The main advantage of trading using opposite Elbit Systems and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon's long position.| Elbit Systems vs. Mercury Systems | Elbit Systems vs. Triumph Group | Elbit Systems vs. CAE Inc | Elbit Systems vs. AAR Corp |
| New Horizon vs. Pentair PLC | New Horizon vs. Griffon | New Horizon vs. Electrovaya Common Shares | New Horizon vs. Corporacion America Airports |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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