Correlation Between Knafaim and El Al
Can any of the company-specific risk be diversified away by investing in both Knafaim and El Al 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 Knafaim and El Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knafaim and El Al Israel, you can compare the effects of market volatilities on Knafaim and El Al 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 Knafaim with a short position of El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knafaim and El Al.
Diversification Opportunities for Knafaim and El Al
Poor diversification
The 3 months correlation between Knafaim and ELAL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Knafaim and El Al Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Al Israel and Knafaim 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 Knafaim are associated (or correlated) with El Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Al Israel has no effect on the direction of Knafaim i.e., Knafaim and El Al go up and down completely randomly.
Pair Corralation between Knafaim and El Al
Assuming the 90 days trading horizon Knafaim is expected to under-perform the El Al. But the stock apears to be less risky and, when comparing its historical volatility, Knafaim is 1.37 times less risky than El Al. The stock trades about -0.05 of its potential returns per unit of risk. The El Al Israel is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 81,500 in El Al Israel on November 3, 2024 and sell it today you would earn a total of 8,360 from holding El Al Israel or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knafaim vs. El Al Israel
Performance |
| Timeline |
| Knafaim |
| El Al Israel |
Knafaim and El Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knafaim and El Al
The main advantage of trading using opposite Knafaim and El Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knafaim position performs unexpectedly, El Al 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 Al will offset losses from the drop in El Al's long position.| Knafaim vs. El Al Israel | Knafaim vs. Melisron | Knafaim vs. Global Knafaim Leasing | Knafaim vs. Bezeq Israeli Telecommunication |
| El Al vs. Delek Group | El Al vs. Teva Pharmaceutical Industries | El Al vs. Fattal 1998 Holdings | El Al vs. Bank Leumi Le Israel |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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