Correlation Between Israel China and Elbit Imaging
Can any of the company-specific risk be diversified away by investing in both Israel China and Elbit Imaging 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 Israel China and Elbit Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and Elbit Imaging, you can compare the effects of market volatilities on Israel China and Elbit Imaging 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 Israel China with a short position of Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Elbit Imaging.
Diversification Opportunities for Israel China and Elbit Imaging
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Israel and Elbit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Israel China 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 Israel China Biotechnology are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Israel China i.e., Israel China and Elbit Imaging go up and down completely randomly.
Pair Corralation between Israel China and Elbit Imaging
Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 2.13 times more return on investment than Elbit Imaging. However, Israel China is 2.13 times more volatile than Elbit Imaging. It trades about 0.27 of its potential returns per unit of risk. Elbit Imaging is currently generating about 0.35 per unit of risk. If you would invest 50,000 in Israel China Biotechnology on August 29, 2024 and sell it today you would earn a total of 9,900 from holding Israel China Biotechnology or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Elbit Imaging
Performance |
| Timeline |
| Israel China Biotech |
| Elbit Imaging |
Israel China and Elbit Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Elbit Imaging
The main advantage of trading using opposite Israel China and Elbit Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Elbit Imaging 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 Elbit Imaging will offset losses from the drop in Elbit Imaging's long position.| Israel China vs. B Communications | Israel China vs. Nova | Israel China vs. Petrochemical | Israel China vs. Israel Opportunity |
| Elbit Imaging vs. Clal Insurance Enterprises | Elbit Imaging vs. Harel Insurance Investments | Elbit Imaging vs. Feat Fund Investments | Elbit Imaging vs. Blender Financial Technologies |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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