Correlation Between IMCO Industries and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both IMCO Industries 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 IMCO Industries and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCO Industries and Elbit Systems, you can compare the effects of market volatilities on IMCO Industries 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 IMCO Industries with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCO Industries and Elbit Systems.
Diversification Opportunities for IMCO Industries and Elbit Systems
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMCO and Elbit is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding IMCO Industries and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and IMCO Industries 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 IMCO Industries 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 IMCO Industries i.e., IMCO Industries and Elbit Systems go up and down completely randomly.
Pair Corralation between IMCO Industries and Elbit Systems
Assuming the 90 days trading horizon IMCO Industries is expected to generate 2.03 times more return on investment than Elbit Systems. However, IMCO Industries is 2.03 times more volatile than Elbit Systems. It trades about 0.01 of its potential returns per unit of risk. Elbit Systems is currently generating about -0.01 per unit of risk. If you would invest 270,000 in IMCO Industries on January 26, 2024 and sell it today you would lose (900.00) from holding IMCO Industries or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMCO Industries vs. Elbit Systems
Performance |
| Timeline |
| IMCO Industries |
| Elbit Systems |
IMCO Industries and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCO Industries and Elbit Systems
The main advantage of trading using opposite IMCO Industries and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCO Industries 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.| IMCO Industries vs. Alony Hetz Properties | IMCO Industries vs. Melisron | IMCO Industries vs. Shufersal | IMCO Industries vs. Israel Discount Bank |
| Elbit Systems vs. Alony Hetz Properties | Elbit Systems vs. Melisron | Elbit Systems vs. Shufersal | Elbit Systems vs. Israel Discount Bank |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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