Correlation Between Multi Retail and Elco
Can any of the company-specific risk be diversified away by investing in both Multi Retail and Elco 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 Multi Retail and Elco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Retail Group and Elco, you can compare the effects of market volatilities on Multi Retail and Elco 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 Multi Retail with a short position of Elco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Retail and Elco.
Diversification Opportunities for Multi Retail and Elco
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multi and Elco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and Elco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elco and Multi Retail 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 Multi Retail Group are associated (or correlated) with Elco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elco has no effect on the direction of Multi Retail i.e., Multi Retail and Elco go up and down completely randomly.
Pair Corralation between Multi Retail and Elco
Assuming the 90 days trading horizon Multi Retail is expected to generate 2.85 times less return on investment than Elco. In addition to that, Multi Retail is 1.17 times more volatile than Elco. It trades about 0.02 of its total potential returns per unit of risk. Elco is currently generating about 0.08 per unit of volatility. If you would invest 1,589,000 in Elco on November 28, 2024 and sell it today you would earn a total of 45,000 from holding Elco or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Retail Group vs. Elco
Performance |
| Timeline |
| Multi Retail Group |
| Elco |
Multi Retail and Elco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Retail and Elco
The main advantage of trading using opposite Multi Retail and Elco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Retail position performs unexpectedly, Elco 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 Elco will offset losses from the drop in Elco's long position.| Multi Retail vs. Shagrir Group Vehicle | Multi Retail vs. IDI Insurance | Multi Retail vs. Harel Insurance Investments | Multi Retail vs. Terminal X Online |
| Elco vs. Alony Hetz Properties | Elco vs. Electra | Elco vs. Clal Insurance Enterprises | Elco vs. Delek Automotive 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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