Correlation Between Elbit Systems and Infimer

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

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

Diversification Opportunities for Elbit Systems and Infimer

0.18

Correlation Coefficient

Elbit Systems  Infimer

Average diversification

The 3 months correlation between Elbit and Infimer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Infimer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infimer 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 Infimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infimer has no effect on the direction of Elbit Systems i.e., Elbit Systems and Infimer go up and down completely randomly.

Pair Corralation between Elbit Systems and Infimer

Assuming the 90 days trading horizon Elbit Systems is expected to generate 260.67 times less return on investment than Infimer. But when comparing it to its historical volatility, Elbit Systems is 178.62 times less risky than Infimer. It trades about 0.25 of its potential returns per unit of risk. Infimer is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  4,700  in Infimer on September 16, 2024 and sell it today you would earn a total of  2,084,300  from holding Infimer or generate 44346.81% return on investment over 90 days.

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

Elbit Systems  vs.  Infimer

Elbit Systems

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 19 (%) 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.

Infimer

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Infimer are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infimer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elbit Systems and Infimer

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

The idea behind Elbit Systems and Infimer 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.