Correlation Between Lilium Equity and Elbit Systems

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

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

Diversification Opportunities for Lilium Equity and Elbit Systems

-0.37

Correlation Coefficient

Lilium Equity  Elbit Systems

Very good diversification

The 3 months correlation between Lilium and Elbit is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Lilium Equity 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 Lilium Equity Warrants 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 Lilium Equity i.e., Lilium Equity and Elbit Systems go up and down completely randomly.

Pair Corralation between Lilium Equity and Elbit Systems

Assuming the 90 days horizon Lilium Equity Warrants is expected to generate 8.4 times more return on investment than Elbit Systems. However, Lilium Equity is 8.4 times more volatile than Elbit Systems. It trades about 0.05 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.12 per unit of risk. If you would invest  11.00  in Lilium Equity Warrants on July 12, 2024 and sell it today you would earn a total of  0.00  from holding Lilium Equity Warrants or generate 0.0% return on investment over 90 days.

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

Lilium Equity Warrants  vs.  Elbit Systems

Lilium Equity Warrants

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lilium Equity Warrants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Lilium Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Elbit Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Elbit Systems may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Lilium Equity and Elbit Systems

The main advantage of trading using opposite Lilium Equity and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium Equity 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.

The idea behind Lilium Equity Warrants and Elbit Systems 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.