Correlation Between Evogene and Elbit Systems

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

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

Diversification Opportunities for Evogene and Elbit Systems

-0.19

Correlation Coefficient

Evogene  Elbit Systems

Good diversification

The 3 months correlation between Evogene and Elbit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Evogene and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems and Evogene 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 Evogene are associated (or correlated) with Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Evogene i.e., Evogene and Elbit Systems go up and down completely randomly.

Pair Corralation between Evogene and Elbit Systems

Assuming the 90 days trading horizon Evogene is expected to under-perform the Elbit Systems. In addition to that, Evogene is 1.31 times more volatile than Elbit Systems. It trades about -0.14 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.34 per unit of volatility. If you would invest  9,495,000  in Elbit Systems on December 30, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evogene  vs.  Elbit Systems

Evogene

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evogene 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.

Elbit Systems

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Systems are ranked lower than 26 (%) 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.

Pair Trading with Evogene and Elbit Systems

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

The idea behind Evogene and Elbit Systems 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.