Correlation Between Mega Or and Elbit Imaging

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

By analyzing existing cross correlation between Mega Or and Elbit Imaging, you can compare the effects of market volatilities on Mega Or and Elbit Imaging 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 Mega Or with a short position of Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Or and Elbit Imaging.

Diversification Opportunities for Mega Or and Elbit Imaging

0.76

Correlation Coefficient

Mega Or  Elbit Imaging

Poor diversification

The 3 months correlation between Mega and Elbit is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mega Or and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Mega Or 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 Mega Or are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Mega Or i.e., Mega Or and Elbit Imaging go up and down completely randomly.

Pair Corralation between Mega Or and Elbit Imaging

Assuming the 90 days trading horizon Mega Or is expected to generate 11.32 times less return on investment than Elbit Imaging. But when comparing it to its historical volatility, Mega Or is 2.03 times less risky than Elbit Imaging. It trades about 0.05 of its potential returns per unit of risk. Elbit Imaging is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  51,900  in Elbit Imaging on September 29, 2024 and sell it today you would earn a total of  8,100  from holding Elbit Imaging or generate 15.61% return on investment over 90 days.

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

Mega Or  vs.  Elbit Imaging

Mega Or

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Or are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mega Or sustained solid returns over the last few months and may actually be approaching a breakup point.

Elbit Imaging

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Imaging are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Elbit Imaging unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mega Or and Elbit Imaging

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

The idea behind Mega Or and Elbit Imaging 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..