Correlation Between Elbit Systems and G City

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

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

Diversification Opportunities for Elbit Systems and G City

-0.89

Correlation Coefficient

Elbit Systems  G City

Pay attention - limited upside

The 3 months correlation between Elbit and GCT is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and G City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G City and Elbit Systems 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 Systems are associated (or correlated) with G City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G City has no effect on the direction of Elbit Systems i.e., Elbit Systems and G City go up and down completely randomly.

Pair Corralation between Elbit Systems and G City

Assuming the 90 days trading horizon Elbit Systems is expected to generate 1.2 times more return on investment than G City. However, Elbit Systems is 1.2 times more volatile than G City. It trades about 0.34 of its potential returns per unit of risk. G City is currently generating about -0.11 per unit of risk. If you would invest  9,495,000  in Elbit Systems on December 28, 2024 and sell it today you would earn a total of  5,055,000  from holding Elbit Systems or generate 53.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.08%
Values	Daily Returns

Elbit Systems  vs.  G City

Elbit Systems

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 27 (%) 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.

G City

Risk-Adjusted Performance

Very Weak

Over the last 90 days G City 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Elbit Systems and G City

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

The idea behind Elbit Systems and G City 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.