Correlation Between IShares SP and Elbit Med
Can any of the company-specific risk be diversified away by investing in both IShares SP and Elbit Med 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 IShares SP and Elbit Med into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP Small Cap and Elbit Med Tech, you can compare the effects of market volatilities on IShares SP and Elbit Med 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 IShares SP with a short position of Elbit Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Elbit Med.
Diversification Opportunities for IShares SP and Elbit Med
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and Elbit is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Small Cap and Elbit Med Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Med Tech and IShares SP 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 iShares SP Small Cap are associated (or correlated) with Elbit Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Med Tech has no effect on the direction of IShares SP i.e., IShares SP and Elbit Med go up and down completely randomly.
Pair Corralation between IShares SP and Elbit Med
Considering the 90-day investment horizon iShares SP Small Cap is expected to generate 0.21 times more return on investment than Elbit Med. However, iShares SP Small Cap is 4.84 times less risky than Elbit Med. It trades about -0.01 of its potential returns per unit of risk. Elbit Med Tech is currently generating about -0.09 per unit of risk. If you would invest 9,881 in iShares SP Small Cap on January 24, 2024 and sell it today you would lose (320.00) from holding iShares SP Small Cap or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.08% |
| Values | Daily Returns |
iShares SP Small Cap vs. Elbit Med Tech
Performance |
| Timeline |
| iShares SP Small |
| Elbit Med Tech |
IShares SP and Elbit Med Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Elbit Med
The main advantage of trading using opposite IShares SP and Elbit Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Elbit Med 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 Med will offset losses from the drop in Elbit Med's long position.| IShares SP vs. Invesco SP MidCap | IShares SP vs. Invesco SP MidCap | IShares SP vs. Invesco SP 500 | IShares SP vs. Invesco SP SmallCap |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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