Correlation Between EN Shoham and El Al
Can any of the company-specific risk be diversified away by investing in both EN Shoham 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 EN Shoham and El Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EN Shoham Business and El Al Israel, you can compare the effects of market volatilities on EN Shoham 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 EN Shoham with a short position of El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and El Al.
Diversification Opportunities for EN Shoham and El Al
Poor diversification
The 3 months correlation between SHOM and ELAL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business 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 EN Shoham 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 EN Shoham Business 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 EN Shoham i.e., EN Shoham and El Al go up and down completely randomly.
Pair Corralation between EN Shoham and El Al
Assuming the 90 days trading horizon EN Shoham is expected to generate 1.12 times less return on investment than El Al. But when comparing it to its historical volatility, EN Shoham Business is 1.43 times less risky than El Al. It trades about 0.15 of its potential returns per unit of risk. El Al Israel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 33,300 in El Al Israel on September 4, 2024 and sell it today you would earn a total of 33,190 from holding El Al Israel or generate 99.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EN Shoham Business vs. El Al Israel
Performance |
| Timeline |
| EN Shoham Business |
| El Al Israel |
EN Shoham and El Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EN Shoham and El Al
The main advantage of trading using opposite EN Shoham and El Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EN Shoham 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.| EN Shoham vs. Menif Financial Services | EN Shoham vs. Accel Solutions Group | EN Shoham vs. Rani Zim Shopping | EN Shoham vs. Mivtach Shamir |
| El Al vs. EN Shoham Business | El Al vs. Accel Solutions Group | El Al vs. Mivtach Shamir | El Al vs. Rani Zim Shopping |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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