Correlation Between Elbit Systems and Eve Holding
Can any of the company-specific risk be diversified away by investing in both Elbit Systems and Eve Holding 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 Eve Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Eve Holding, you can compare the effects of market volatilities on Elbit Systems and Eve Holding 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 Eve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Eve Holding.
Diversification Opportunities for Elbit Systems and Eve Holding
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elbit and Eve is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding 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 Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Elbit Systems i.e., Elbit Systems and Eve Holding go up and down completely randomly.
Pair Corralation between Elbit Systems and Eve Holding
Given the investment horizon of 90 days Elbit Systems is expected to generate 2.21 times less return on investment than Eve Holding. But when comparing it to its historical volatility, Elbit Systems is 2.19 times less risky than Eve Holding. It trades about 0.21 of its potential returns per unit of risk. Eve Holding is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 281.00 in Eve Holding on September 12, 2024 and sell it today you would earn a total of 171.00 from holding Eve Holding or generate 60.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Elbit Systems vs. Eve Holding
Performance |
Timeline |
Elbit Systems |
Eve Holding |
Elbit Systems and Eve Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elbit Systems and Eve Holding
The main advantage of trading using opposite Elbit Systems and Eve Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems position performs unexpectedly, Eve Holding 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 Eve Holding will offset losses from the drop in Eve Holding's long position.Elbit Systems vs. Mercury Systems | Elbit Systems vs. Triumph Group | Elbit Systems vs. CAE Inc | Elbit Systems vs. AAR Corp |
Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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