Correlation Between Aristocrat Leisure and Elbit Imaging
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Elbit Imaging 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 Aristocrat Leisure and Elbit Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Elbit Imaging, you can compare the effects of market volatilities on Aristocrat Leisure and Elbit Imaging 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 Aristocrat Leisure with a short position of Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Elbit Imaging.
Diversification Opportunities for Aristocrat Leisure and Elbit Imaging
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aristocrat and Elbit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Elbit Imaging go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Elbit Imaging
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.52 times more return on investment than Elbit Imaging. However, Aristocrat Leisure Limited is 1.92 times less risky than Elbit Imaging. It trades about -0.13 of its potential returns per unit of risk. Elbit Imaging is currently generating about -0.07 per unit of risk. If you would invest 2,967 in Aristocrat Leisure Limited on December 30, 2023 and sell it today you would lose (126.00) from holding Aristocrat Leisure Limited or give up 4.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 81.82% |
Values | Daily Returns |
Aristocrat Leisure Limited vs. Elbit Imaging
Performance |
Timeline |
Aristocrat Leisure |
Elbit Imaging |
Aristocrat Leisure and Elbit Imaging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aristocrat Leisure and Elbit Imaging
The main advantage of trading using opposite Aristocrat Leisure and Elbit Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Elbit Imaging 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 Imaging will offset losses from the drop in Elbit Imaging's long position.Aristocrat Leisure vs. Cardinal Health | Aristocrat Leisure vs. Ameriprise Financial | Aristocrat Leisure vs. Waste Management | Aristocrat Leisure vs. CDW Corp |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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