Correlation Between Elbit Systems and IMCO Industries
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and IMCO Industries 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 Elbit Systems and IMCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and IMCO Industries, you can compare the effects of market volatilities on Elbit Systems and IMCO Industries 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 Elbit Systems with a short position of IMCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and IMCO Industries.
Diversification Opportunities for Elbit Systems and IMCO Industries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elbit and IMCO is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and IMCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCO Industries and Elbit Systems 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 Elbit Systems are associated (or correlated) with IMCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCO Industries has no effect on the direction of Elbit Systems i.e., Elbit Systems and IMCO Industries go up and down completely randomly.
Pair Corralation between Elbit Systems and IMCO Industries
Assuming the 90 days trading horizon Elbit Systems is expected to generate 8.51 times less return on investment than IMCO Industries. But when comparing it to its historical volatility, Elbit Systems is 2.58 times less risky than IMCO Industries. It trades about 0.02 of its potential returns per unit of risk. IMCO Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 259,900 in IMCO Industries on January 26, 2024 and sell it today you would earn a total of 9,200 from holding IMCO Industries or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. IMCO Industries
Performance |
| Timeline |
| Elbit Systems |
| IMCO Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elbit Systems and IMCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and IMCO Industries
The main advantage of trading using opposite Elbit Systems and IMCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, IMCO Industries 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 IMCO Industries will offset losses from the drop in IMCO Industries' long position.| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
| IMCO Industries vs. Fox Wizel | IMCO Industries vs. Bet Shemesh Engines | IMCO Industries vs. Analyst IMS Investment |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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