Correlation Between Elbit Systems and Sunflow Sustain

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

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

Diversification Opportunities for Elbit Systems and Sunflow Sustain

-0.31

Correlation Coefficient

Elbit Systems  Sunflow Sustain

Very good diversification

The 3 months correlation between Elbit and Sunflow is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Sunflow Sustain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunflow Sustain 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 Sunflow Sustain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunflow Sustain has no effect on the direction of Elbit Systems i.e., Elbit Systems and Sunflow Sustain go up and down completely randomly.

Pair Corralation between Elbit Systems and Sunflow Sustain

Assuming the 90 days trading horizon Elbit Systems is expected to generate 0.74 times more return on investment than Sunflow Sustain. However, Elbit Systems is 1.35 times less risky than Sunflow Sustain. It trades about 0.25 of its potential returns per unit of risk. Sunflow Sustain is currently generating about -0.04 per unit of risk. If you would invest  7,313,263  in Elbit Systems on September 15, 2024 and sell it today you would earn a total of  1,738,737  from holding Elbit Systems or generate 23.78% return on investment over 90 days.

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

Elbit Systems  vs.  Sunflow Sustain

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.

Sunflow Sustain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunflow Sustain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Elbit Systems and Sunflow Sustain

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

The idea behind Elbit Systems and Sunflow Sustain 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .