Correlation Between Elbit Medical and IDI Insurance

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

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

Diversification Opportunities for Elbit Medical and IDI Insurance

0.15

Correlation Coefficient

Elbit Medical  IDI Insurance

Average diversification

The 3 months correlation between Elbit and IDI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Medical Technologies and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance and Elbit Medical 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 Medical Technologies are associated (or correlated) with IDI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI Insurance has no effect on the direction of Elbit Medical i.e., Elbit Medical and IDI Insurance go up and down completely randomly.

Pair Corralation between Elbit Medical and IDI Insurance

Assuming the 90 days trading horizon Elbit Medical is expected to generate 4.17 times less return on investment than IDI Insurance. In addition to that, Elbit Medical is 3.07 times more volatile than IDI Insurance. It trades about 0.01 of its total potential returns per unit of risk. IDI Insurance is currently generating about 0.15 per unit of volatility. If you would invest  947,606  in IDI Insurance on October 12, 2024 and sell it today you would earn a total of  440,394  from holding IDI Insurance or generate 46.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.58%
Values	Daily Returns

Elbit Medical Technologies  vs.  IDI Insurance

Elbit Medical Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elbit Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IDI Insurance

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IDI Insurance are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IDI Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elbit Medical and IDI Insurance

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

The idea behind Elbit Medical Technologies and IDI Insurance 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.