Correlation Between Tel Aviv and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Tel Aviv 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 Tel Aviv and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tel Aviv 35 and Elbit Systems, you can compare the effects of market volatilities on Tel Aviv 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 Tel Aviv with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Elbit Systems.
Diversification Opportunities for Tel Aviv and Elbit Systems
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tel and Elbit is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Tel Aviv 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 Tel Aviv 35 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 Tel Aviv i.e., Tel Aviv and Elbit Systems go up and down completely randomly.
Pair Corralation between Tel Aviv and Elbit Systems
Assuming the 90 days trading horizon Tel Aviv is expected to generate 2.03 times less return on investment than Elbit Systems. But when comparing it to its historical volatility, Tel Aviv 35 is 2.39 times less risky than Elbit Systems. It trades about 0.12 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,514,000 in Elbit Systems on August 31, 2024 and sell it today you would earn a total of 306,000 from holding Elbit Systems or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Elbit Systems
Performance |
| Timeline |
Tel Aviv and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Elbit Systems
Pair trading matchups for Elbit Systems
Pair Trading with Tel Aviv and Elbit Systems
The main advantage of trading using opposite Tel Aviv and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv 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.| Tel Aviv vs. Clal Insurance Enterprises | Tel Aviv vs. Meitav Trade Inv | Tel Aviv vs. One Software Technologies | Tel Aviv vs. Wesure Global Tech |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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