Correlation Between Elbit Systems and LivePerson

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

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

Diversification Opportunities for Elbit Systems and LivePerson

-0.73

Correlation Coefficient

Elbit Systems  LivePerson

Pay attention - limited upside

The 3 months correlation between Elbit and LivePerson is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and LivePerson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivePerson 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 LivePerson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivePerson has no effect on the direction of Elbit Systems i.e., Elbit Systems and LivePerson go up and down completely randomly.

Pair Corralation between Elbit Systems and LivePerson

Assuming the 90 days trading horizon Elbit Systems is expected to generate 0.39 times more return on investment than LivePerson. However, Elbit Systems is 2.55 times less risky than LivePerson. It trades about 0.26 of its potential returns per unit of risk. LivePerson is currently generating about -0.15 per unit of risk. If you would invest  7,399,308  in Elbit Systems on September 28, 2024 and sell it today you would earn a total of  1,951,692  from holding Elbit Systems or generate 26.38% return on investment over 90 days.

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

Elbit Systems  vs.  LivePerson

Elbit Systems

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 20 (%) 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.

LivePerson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LivePerson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Elbit Systems and LivePerson

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

The idea behind Elbit Systems and LivePerson 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.