Correlation Between Vanguard and Elbit Med

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Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and Elbit Med into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Sp Small Cap and Elbit Med Tech, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of Elbit Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Elbit Med.

Diversification Opportunities for Vanguard and Elbit Med

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Vanguard and Elbit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding VANGUARD 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 Vanguard 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 Vanguard 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 Vanguard i.e., Vanguard and Elbit Med go up and down completely randomly.

Pair Corralation between Vanguard and Elbit Med

Assuming the 90 days horizon Vanguard Sp Small Cap is expected to generate 0.16 times more return on investment than Elbit Med. However, Vanguard Sp Small Cap is 6.11 times less risky than Elbit Med. It trades about 0.05 of its potential returns per unit of risk. Elbit Med Tech is currently generating about -0.04 per unit of risk. If you would invest  35,251  in Vanguard Sp Small Cap on December 29, 2023 and sell it today you would earn a total of  5,340  from holding Vanguard Sp Small Cap or generate 15.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy79.03%
ValuesDaily Returns

VANGUARD SP SMALL-CAP  vs.  Elbit Med Tech

 Performance 
       Timeline  
Vanguard Sp Small-cap 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Sp Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Elbit Med Tech 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Elbit Med Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Vanguard and Elbit Med Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard and Elbit Med

The main advantage of trading using opposite Vanguard and Elbit Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.
The idea behind Vanguard Sp Small Cap and Elbit Med Tech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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