Correlation Between Elbit Systems and Camtek

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

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

Diversification Opportunities for Elbit Systems and Camtek

-0.34

Correlation Coefficient

Elbit Systems  Camtek

Very good diversification

The 3 months correlation between Elbit and Camtek is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Camtek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camtek 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 Camtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camtek has no effect on the direction of Elbit Systems i.e., Elbit Systems and Camtek go up and down completely randomly.

Pair Corralation between Elbit Systems and Camtek

Given the investment horizon of 90 days Elbit Systems is expected to generate 3.1 times less return on investment than Camtek. But when comparing it to its historical volatility, Elbit Systems is 2.1 times less risky than Camtek. It trades about 0.06 of its potential returns per unit of risk. Camtek is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,367  in Camtek on September 29, 2024 and sell it today you would earn a total of  5,879  from holding Camtek or generate 248.37% return on investment over 90 days.

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

Elbit Systems  vs.  Camtek

Elbit Systems

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Elbit Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Camtek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camtek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Camtek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Elbit Systems and Camtek

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

The idea behind Elbit Systems and Camtek 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.