Correlation Between Elbit Systems and Ammo Preferred

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

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

Diversification Opportunities for Elbit Systems and Ammo Preferred

-0.62

Correlation Coefficient

Elbit Systems  Ammo Preferred

Excellent diversification

The 3 months correlation between Elbit and Ammo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Ammo Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Preferred 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 Ammo Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Preferred has no effect on the direction of Elbit Systems i.e., Elbit Systems and Ammo Preferred go up and down completely randomly.

Pair Corralation between Elbit Systems and Ammo Preferred

Given the investment horizon of 90 days Elbit Systems is expected to generate 0.4 times more return on investment than Ammo Preferred. However, Elbit Systems is 2.52 times less risky than Ammo Preferred. It trades about 0.22 of its potential returns per unit of risk. Ammo Preferred is currently generating about -0.05 per unit of risk. If you would invest  19,771  in Elbit Systems on September 12, 2024 and sell it today you would earn a total of  5,368  from holding Elbit Systems or generate 27.15% 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.  Ammo Preferred

Elbit Systems

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Elbit Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ammo Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Elbit Systems and Ammo Preferred

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

The idea behind Elbit Systems and Ammo Preferred 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.