Correlation Between Elbit Systems and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Tower Semiconductor 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 Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Tower Semiconductor, you can compare the effects of market volatilities on Elbit Systems and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Tower Semiconductor.
Diversification Opportunities for Elbit Systems and Tower Semiconductor
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elbit and Tower is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Elbit Systems i.e., Elbit Systems and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Elbit Systems and Tower Semiconductor
Given the investment horizon of 90 days Elbit Systems is expected to generate 0.43 times more return on investment than Tower Semiconductor. However, Elbit Systems is 2.33 times less risky than Tower Semiconductor. It trades about 0.3 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.09 per unit of risk. If you would invest 22,697 in Elbit Systems on August 28, 2024 and sell it today you would earn a total of 2,614 from holding Elbit Systems or generate 11.52% 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. Tower Semiconductor
Performance |
| Timeline |
| Elbit Systems |
| Tower Semiconductor |
Elbit Systems and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Tower Semiconductor
The main advantage of trading using opposite Elbit Systems and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Elbit Systems vs. Redwire Corp | Elbit Systems vs. Sidus Space | Elbit Systems vs. Rocket Lab USA | Elbit Systems vs. Momentus |
| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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