Correlation Between Canzon Israel and Elbit Systems

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

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

Diversification Opportunities for Canzon Israel and Elbit Systems

0.2

Correlation Coefficient

Canzon Israel  Elbit Systems

Modest diversification

The 3 months correlation between Canzon and Elbit is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Canzon Israel and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Canzon Israel 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 Canzon Israel are associated (or correlated) with Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Canzon Israel i.e., Canzon Israel and Elbit Systems go up and down completely randomly.

Pair Corralation between Canzon Israel and Elbit Systems

Assuming the 90 days trading horizon Canzon Israel is expected to generate 5.73 times more return on investment than Elbit Systems. However, Canzon Israel is 5.73 times more volatile than Elbit Systems. It trades about 0.08 of its potential returns per unit of risk. Elbit Systems is currently generating about 0.34 per unit of risk. If you would invest  9,200  in Canzon Israel on December 30, 2024 and sell it today you would earn a total of  2,570  from holding Canzon Israel or generate 27.93% return on investment over 90 days.

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

Canzon Israel  vs.  Elbit Systems

Canzon Israel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canzon Israel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Canzon Israel sustained solid returns over the last few months and may actually be approaching a breakup point.

Elbit Systems

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 26 (%) 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.

Pair Trading with Canzon Israel and Elbit Systems

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

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