Correlation Between Elbit Imaging and Brainsway

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

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

Diversification Opportunities for Elbit Imaging and Brainsway

0.8

Correlation Coefficient

Elbit Imaging  Brainsway

Very poor diversification

The 3 months correlation between Elbit and Brainsway is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Imaging and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Elbit Imaging 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 Imaging are associated (or correlated) with Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Elbit Imaging i.e., Elbit Imaging and Brainsway go up and down completely randomly.

Pair Corralation between Elbit Imaging and Brainsway

Assuming the 90 days trading horizon Elbit Imaging is expected to generate 67.52 times less return on investment than Brainsway. But when comparing it to its historical volatility, Elbit Imaging is 1.31 times less risky than Brainsway. It trades about 0.0 of its potential returns per unit of risk. Brainsway is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  105,100  in Brainsway on February 4, 2024 and sell it today you would earn a total of  2,900  from holding Brainsway or generate 2.76% return on investment over 90 days.

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

Elbit Imaging  vs.  Brainsway

Elbit Imaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elbit Imaging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Brainsway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Elbit Imaging and Brainsway

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

The idea behind Elbit Imaging and Brainsway 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.