Correlation Between Elbit Systems and Matrix

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

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

Diversification Opportunities for Elbit Systems and Matrix

0.74

Correlation Coefficient

Elbit Systems  Matrix

Poor diversification

The 3 months correlation between Elbit and Matrix is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix 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 Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Elbit Systems i.e., Elbit Systems and Matrix go up and down completely randomly.

Pair Corralation between Elbit Systems and Matrix

Assuming the 90 days trading horizon Elbit Systems is expected to generate 2.51 times more return on investment than Matrix. However, Elbit Systems is 2.51 times more volatile than Matrix. It trades about 0.24 of its potential returns per unit of risk. Matrix is currently generating about 0.14 per unit of risk. If you would invest  7,178,472  in Elbit Systems on November 28, 2024 and sell it today you would earn a total of  3,491,528  from holding Elbit Systems or generate 48.64% return on investment over 90 days.

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

Elbit Systems  vs.  Matrix

Elbit Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 19 (%) 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.

Matrix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Elbit Systems and Matrix

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

The idea behind Elbit Systems and Matrix 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.