Correlation Between El Al and PACIFIC

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

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

Diversification Opportunities for El Al and PACIFIC

0.31

Correlation Coefficient

El Al  PACIFIC

Weak diversification

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

Pair Corralation between El Al and PACIFIC

Assuming the 90 days horizon El Al Israel is expected to generate 2.59 times more return on investment than PACIFIC. However, El Al is 2.59 times more volatile than PACIFIC GAS AND. It trades about 0.16 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.02 per unit of risk. If you would invest  198.00  in El Al Israel on October 7, 2024 and sell it today you would earn a total of  27.00  from holding El Al Israel or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.37%
Values	Daily Returns

El Al Israel  vs.  PACIFIC GAS AND

El Al Israel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Al Israel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, El Al reported solid returns over the last few months and may actually be approaching a breakup point.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with El Al and PACIFIC

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

The idea behind El Al Israel and PACIFIC GAS AND 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.