Correlation Between Mivne Real and Elron Electronic

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

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

Diversification Opportunities for Mivne Real and Elron Electronic

-0.42

Correlation Coefficient

Mivne Real  Elron Electronic

Very good diversification

The 3 months correlation between Mivne and Elron is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mivne Real Estate 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 Mivne Real 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 Mivne Real Estate 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 Mivne Real i.e., Mivne Real and Elron Electronic go up and down completely randomly.

Pair Corralation between Mivne Real and Elron Electronic

Assuming the 90 days trading horizon Mivne Real Estate is expected to generate 1.25 times more return on investment than Elron Electronic. However, Mivne Real is 1.25 times more volatile than Elron Electronic Industries. It trades about 0.07 of its potential returns per unit of risk. Elron Electronic Industries is currently generating about -0.22 per unit of risk. If you would invest  93,210  in Mivne Real Estate on February 7, 2024 and sell it today you would earn a total of  1,500  from holding Mivne Real Estate or generate 1.61% return on investment over 90 days.

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

Mivne Real Estate  vs.  Elron Electronic Industries

Mivne Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Mivne Real and Elron Electronic

The main advantage of trading using opposite Mivne Real and Elron Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mivne Real 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 Mivne Real Estate 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.