Correlation Between Arhaus and Eltek

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

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

Diversification Opportunities for Arhaus and Eltek

0.1

Correlation Coefficient

Arhaus  Eltek

Average diversification

The 3 months correlation between Arhaus and Eltek is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Arhaus 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 Arhaus Inc are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of Arhaus i.e., Arhaus and Eltek go up and down completely randomly.

Pair Corralation between Arhaus and Eltek

Given the investment horizon of 90 days Arhaus is expected to generate 1.26 times less return on investment than Eltek. In addition to that, Arhaus is 1.4 times more volatile than Eltek. It trades about 0.02 of its total potential returns per unit of risk. Eltek is currently generating about 0.03 per unit of volatility. If you would invest  1,089  in Eltek on September 12, 2024 and sell it today you would earn a total of  25.00  from holding Eltek or generate 2.3% return on investment over 90 days.

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

Arhaus Inc  vs.  Eltek

Arhaus Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Eltek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arhaus and Eltek

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

The idea behind Arhaus Inc and Eltek 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.