Correlation Between Elbit Systems and IBI Mutual

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

By analyzing existing cross correlation between Elbit Systems and IBI Mutual Funds, you can compare the effects of market volatilities on Elbit Systems and IBI Mutual 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 IBI Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and IBI Mutual.

Diversification Opportunities for Elbit Systems and IBI Mutual

0.75

Correlation Coefficient

Elbit Systems  IBI Mutual

Poor diversification

The 3 months correlation between Elbit and IBI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and IBI Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Mutual Funds 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 IBI Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Mutual Funds has no effect on the direction of Elbit Systems i.e., Elbit Systems and IBI Mutual go up and down completely randomly.

Pair Corralation between Elbit Systems and IBI Mutual

Assuming the 90 days trading horizon Elbit Systems is expected to generate 1.06 times more return on investment than IBI Mutual. However, Elbit Systems is 1.06 times more volatile than IBI Mutual Funds. It trades about 0.3 of its potential returns per unit of risk. IBI Mutual Funds is currently generating about 0.12 per unit of risk. If you would invest  7,255,300  in Elbit Systems on September 21, 2024 and sell it today you would earn a total of  2,244,700  from holding Elbit Systems or generate 30.94% return on investment over 90 days.

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

Elbit Systems  vs.  IBI Mutual Funds

Elbit Systems

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elbit Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

IBI Mutual Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Mutual Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IBI Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elbit Systems and IBI Mutual

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

The idea behind Elbit Systems and IBI Mutual Funds 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.