Correlation Between Elbit Imaging and Dan Hotels

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

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

Diversification Opportunities for Elbit Imaging and Dan Hotels

-0.55

Correlation Coefficient

Elbit Imaging  Dan Hotels

Excellent diversification

The 3 months correlation between Elbit and Dan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Imaging and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Elbit Imaging 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 Imaging are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Elbit Imaging i.e., Elbit Imaging and Dan Hotels go up and down completely randomly.

Pair Corralation between Elbit Imaging and Dan Hotels

Assuming the 90 days trading horizon Elbit Imaging is expected to generate 1.75 times more return on investment than Dan Hotels. However, Elbit Imaging is 1.75 times more volatile than Dan Hotels. It trades about 0.24 of its potential returns per unit of risk. Dan Hotels is currently generating about 0.02 per unit of risk. If you would invest  37,100  in Elbit Imaging on September 12, 2024 and sell it today you would earn a total of  12,900  from holding Elbit Imaging or generate 34.77% return on investment over 90 days.

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

Elbit Imaging  vs.  Dan Hotels

Elbit Imaging

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Imaging are ranked lower than 18 (%) 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.

Dan Hotels

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dan Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elbit Imaging and Dan Hotels

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

The idea behind Elbit Imaging and Dan Hotels 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.