Correlation Between Arad Investment and Bareket Capital
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Bareket Capital 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 Arad Investment and Bareket Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad Investment Industrial and Bareket Capital, you can compare the effects of market volatilities on Arad Investment and Bareket Capital 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 Arad Investment with a short position of Bareket Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Bareket Capital.
Diversification Opportunities for Arad Investment and Bareket Capital
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arad and Bareket is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Bareket Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bareket Capital and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with Bareket Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bareket Capital has no effect on the direction of Arad Investment i.e., Arad Investment and Bareket Capital go up and down completely randomly.
Pair Corralation between Arad Investment and Bareket Capital
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 4.26 times more return on investment than Bareket Capital. However, Arad Investment is 4.26 times more volatile than Bareket Capital. It trades about 0.51 of its potential returns per unit of risk. Bareket Capital is currently generating about 0.8 per unit of risk. If you would invest 848,500 in Arad Investment Industrial on August 26, 2024 and sell it today you would earn a total of 482,500 from holding Arad Investment Industrial or generate 56.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Bareket Capital
Performance |
| Timeline |
| Arad Investment Indu |
| Bareket Capital |
Arad Investment and Bareket Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Bareket Capital
The main advantage of trading using opposite Arad Investment and Bareket Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Bareket Capital 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 Bareket Capital will offset losses from the drop in Bareket Capital's long position.| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
| Bareket Capital vs. Arad Investment Industrial | Bareket Capital vs. Tower Semiconductor | Bareket Capital vs. Storage Drop Storage | Bareket Capital vs. Abra Information Technologies |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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