Correlation Between Elbit Systems and Alony Hetz

Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Alony Hetz 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 Elbit Systems and Alony Hetz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elbit Systems and Alony Hetz Properties, you can compare the effects of market volatilities on Elbit Systems and Alony Hetz 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 Elbit Systems with a short position of Alony Hetz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Alony Hetz.

Diversification Opportunities for Elbit Systems and Alony Hetz

0.17

Correlation Coefficient

Elbit Systems  Alony Hetz

Average diversification

The 3 months correlation between Elbit and Alony is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Alony Hetz Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alony Hetz Properties and Elbit Systems 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 Elbit Systems are associated (or correlated) with Alony Hetz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alony Hetz Properties has no effect on the direction of Elbit Systems i.e., Elbit Systems and Alony Hetz go up and down completely randomly.

Pair Corralation between Elbit Systems and Alony Hetz

Assuming the 90 days trading horizon Elbit Systems is expected to generate 0.68 times more return on investment than Alony Hetz. However, Elbit Systems is 1.48 times less risky than Alony Hetz. It trades about -0.01 of its potential returns per unit of risk. Alony Hetz Properties is currently generating about -0.03 per unit of risk. If you would invest  7,525,120  in Elbit Systems on February 7, 2024 and sell it today you would lose (47,120) from holding Elbit Systems or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Elbit Systems  vs.  Alony Hetz Properties

Elbit Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alony Hetz Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alony Hetz Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Elbit Systems and Alony Hetz

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

The idea behind Elbit Systems and Alony Hetz Properties 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.