Correlation Between MEITAV INVESTMENTS and Elron Electronic

Can any of the company-specific risk be diversified away by investing in both MEITAV INVESTMENTS and Elron Electronic 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 MEITAV INVESTMENTS and Elron Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEITAV INVESTMENTS HOUSE and Elron Electronic Industries, you can compare the effects of market volatilities on MEITAV INVESTMENTS and Elron Electronic 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 MEITAV INVESTMENTS with a short position of Elron Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEITAV INVESTMENTS and Elron Electronic.

Diversification Opportunities for MEITAV INVESTMENTS and Elron Electronic

-0.2

Correlation Coefficient

MEITAV INVESTMENTS  Elron Electronic

Good diversification

The 3 months correlation between MEITAV and Elron is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding MEITAV INVESTMENTS HOUSE and Elron Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elron Electronic Ind and MEITAV INVESTMENTS 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 MEITAV INVESTMENTS HOUSE are associated (or correlated) with Elron Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elron Electronic Ind has no effect on the direction of MEITAV INVESTMENTS i.e., MEITAV INVESTMENTS and Elron Electronic go up and down completely randomly.

Pair Corralation between MEITAV INVESTMENTS and Elron Electronic

Assuming the 90 days trading horizon MEITAV INVESTMENTS HOUSE is expected to generate 1.04 times more return on investment than Elron Electronic. However, MEITAV INVESTMENTS is 1.04 times more volatile than Elron Electronic Industries. It trades about 0.15 of its potential returns per unit of risk. Elron Electronic Industries is currently generating about -0.06 per unit of risk. If you would invest  159,134  in MEITAV INVESTMENTS HOUSE on February 29, 2024 and sell it today you would earn a total of  19,666  from holding MEITAV INVESTMENTS HOUSE or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MEITAV INVESTMENTS HOUSE  vs.  Elron Electronic Industries

MEITAV INVESTMENTS HOUSE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEITAV INVESTMENTS HOUSE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEITAV INVESTMENTS sustained solid returns over the last few months and may actually be approaching a breakup point.

Elron Electronic Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elron Electronic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elron Electronic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MEITAV INVESTMENTS and Elron Electronic

The main advantage of trading using opposite MEITAV INVESTMENTS and Elron Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEITAV INVESTMENTS position performs unexpectedly, Elron Electronic 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 Elron Electronic will offset losses from the drop in Elron Electronic's long position.

The idea behind MEITAV INVESTMENTS HOUSE and Elron Electronic Industries 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.