Correlation Between Space and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Space 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 Space and Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Space Com and Elbit Systems, you can compare the effects of market volatilities on Space 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 Space with a short position of Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space and Elbit Systems.
Diversification Opportunities for Space and Elbit Systems
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Space and Elbit is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Space Com and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Space 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 Space Com 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 Space i.e., Space and Elbit Systems go up and down completely randomly.
Pair Corralation between Space and Elbit Systems
Assuming the 90 days trading horizon Space Com is expected to generate 2.82 times more return on investment than Elbit Systems. However, Space is 2.82 times more volatile than Elbit Systems. It trades about 0.02 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.02 per unit of risk. If you would invest 6,010 in Space Com on January 20, 2024 and sell it today you would lose (10.00) from holding Space Com or give up 0.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.74% |
Values | Daily Returns |
Space Com vs. Elbit Systems
Performance |
Timeline |
Space Com |
Elbit Systems |
Space and Elbit Systems Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Space and Elbit Systems
The main advantage of trading using opposite Space and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Space 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.Space vs. Bezeq Israeli Telecommunication | Space vs. Tower Semiconductor | Space vs. El Al Israel | Space vs. Kamada |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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