Correlation Between Israel Opportunity and El Mor
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity and El Mor 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 Opportunity and El Mor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and El Mor Electric Installation, you can compare the effects of market volatilities on Israel Opportunity and El Mor 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 Opportunity with a short position of El Mor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and El Mor.
Diversification Opportunities for Israel Opportunity and El Mor
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and ELMR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and El Mor Electric Installation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Mor Electric and Israel Opportunity 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 Opportunity are associated (or correlated) with El Mor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Mor Electric has no effect on the direction of Israel Opportunity i.e., Israel Opportunity and El Mor go up and down completely randomly.
Pair Corralation between Israel Opportunity and El Mor
Assuming the 90 days trading horizon Israel Opportunity is expected to under-perform the El Mor. In addition to that, Israel Opportunity is 1.28 times more volatile than El Mor Electric Installation. It trades about -0.12 of its total potential returns per unit of risk. El Mor Electric Installation is currently generating about 0.22 per unit of volatility. If you would invest 107,800 in El Mor Electric Installation on August 28, 2024 and sell it today you would earn a total of 10,200 from holding El Mor Electric Installation or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. El Mor Electric Installation
Performance |
| Timeline |
| Israel Opportunity |
| El Mor Electric |
Israel Opportunity and El Mor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and El Mor
The main advantage of trading using opposite Israel Opportunity and El Mor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity position performs unexpectedly, El Mor 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 El Mor will offset losses from the drop in El Mor's long position.| Israel Opportunity vs. OPC Energy | Israel Opportunity vs. Delek Group | Israel Opportunity vs. Lapidoth | Israel Opportunity vs. Naphtha |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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