Correlation Between Kamada and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Kamada and Elbit Systems 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 Kamada and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kamada and Elbit Systems, you can compare the effects of market volatilities on Kamada and Elbit Systems 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 Kamada with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and Elbit Systems.
Diversification Opportunities for Kamada and Elbit Systems
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kamada and Elbit is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Kamada 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 Kamada are associated (or correlated) with Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Kamada i.e., Kamada and Elbit Systems go up and down completely randomly.
Pair Corralation between Kamada and Elbit Systems
Assuming the 90 days trading horizon Kamada is expected to generate 1.66 times more return on investment than Elbit Systems. However, Kamada is 1.66 times more volatile than Elbit Systems. It trades about 0.45 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.51 per unit of risk. If you would invest 221,500 in Kamada on October 21, 2024 and sell it today you would earn a total of 39,000 from holding Kamada or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kamada vs. Elbit Systems
Performance |
| Timeline |
| Kamada |
| Elbit Systems |
Kamada and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kamada and Elbit Systems
The main advantage of trading using opposite Kamada and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamada position performs unexpectedly, Elbit Systems 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 Systems will offset losses from the drop in Elbit Systems' long position.| Kamada vs. Kamada | Kamada vs. Teva Pharmaceutical Industries | Kamada vs. Tower Semiconductor | Kamada vs. Elbit Systems |
| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
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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