Correlation Between Partner and Elron Electronic
Can any of the company-specific risk be diversified away by investing in both Partner and Elron Electronic 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 Partner and Elron Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Partner and Elron Electronic Industries, you can compare the effects of market volatilities on Partner and Elron Electronic 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 Partner with a short position of Elron Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Partner and Elron Electronic.
Diversification Opportunities for Partner and Elron Electronic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Partner and Elron is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Partner and Elron Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elron Electronic Ind and Partner 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 Partner are associated (or correlated) with Elron Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elron Electronic Ind has no effect on the direction of Partner i.e., Partner and Elron Electronic go up and down completely randomly.
Pair Corralation between Partner and Elron Electronic
Assuming the 90 days trading horizon Partner is expected to generate 1.35 times less return on investment than Elron Electronic. But when comparing it to its historical volatility, Partner is 1.51 times less risky than Elron Electronic. It trades about 0.4 of its potential returns per unit of risk. Elron Electronic Industries is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 34,010 in Elron Electronic Industries on August 25, 2024 and sell it today you would earn a total of 12,690 from holding Elron Electronic Industries or generate 37.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Partner vs. Elron Electronic Industries
Performance |
| Timeline |
| Partner |
| Elron Electronic Ind |
Partner and Elron Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Partner and Elron Electronic
The main advantage of trading using opposite Partner and Elron Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Partner position performs unexpectedly, Elron Electronic 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 Elron Electronic will offset losses from the drop in Elron Electronic's long position.| Partner vs. Bank Leumi Le Israel | Partner vs. Teva Pharmaceutical Industries | Partner vs. Bank Hapoalim | Partner vs. Elbit Systems |
| Elron Electronic vs. Elbit Systems | Elron Electronic vs. Discount Investment Corp | Elron Electronic vs. Clal Insurance Enterprises | Elron Electronic vs. AudioCodes |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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