Correlation Between Dan Hotels and El Al

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

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

Diversification Opportunities for Dan Hotels and El Al

-0.63

Correlation Coefficient

Dan Hotels  El Al

Excellent diversification

The 3 months correlation between Dan and ELAL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and El Al Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Al Israel and Dan Hotels 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 Dan Hotels are associated (or correlated) with El Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Al Israel has no effect on the direction of Dan Hotels i.e., Dan Hotels and El Al go up and down completely randomly.

Pair Corralation between Dan Hotels and El Al

Assuming the 90 days trading horizon Dan Hotels is expected to under-perform the El Al. But the stock apears to be less risky and, when comparing its historical volatility, Dan Hotels is 2.91 times less risky than El Al. The stock trades about -0.11 of its potential returns per unit of risk. The El Al Israel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  59,520  in El Al Israel on September 2, 2024 and sell it today you would earn a total of  7,480  from holding El Al Israel or generate 12.57% return on investment over 90 days.

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

Dan Hotels  vs.  El Al Israel

Dan Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dan Hotels 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.

El Al Israel

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Dan Hotels and El Al

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

The idea behind Dan Hotels and El Al Israel 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.