Correlation Between Arad Investment and Discount Investment
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Discount Investment 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 Discount Investment 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 Discount Investment Corp, you can compare the effects of market volatilities on Arad Investment and Discount Investment 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 Discount Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Discount Investment.
Diversification Opportunities for Arad Investment and Discount Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arad and Discount is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Discount Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Investment Corp 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 Discount Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Investment Corp has no effect on the direction of Arad Investment i.e., Arad Investment and Discount Investment go up and down completely randomly.
Pair Corralation between Arad Investment and Discount Investment
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 1.05 times more return on investment than Discount Investment. However, Arad Investment is 1.05 times more volatile than Discount Investment Corp. It trades about 0.51 of its potential returns per unit of risk. Discount Investment Corp is currently generating about 0.15 per unit of risk. If you would invest 1,007,000 in Arad Investment Industrial on September 2, 2024 and sell it today you would earn a total of 364,000 from holding Arad Investment Industrial or generate 36.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Discount Investment Corp
Performance |
| Timeline |
| Arad Investment Indu |
| Discount Investment Corp |
Arad Investment and Discount Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Discount Investment
The main advantage of trading using opposite Arad Investment and Discount Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Discount Investment 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 Discount Investment will offset losses from the drop in Discount Investment's long position.| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Airport City | Arad Investment vs. Harel Insurance Investments |
| Discount Investment vs. Arad | Discount Investment vs. Alony Hetz Properties | Discount Investment vs. Airport City | Discount Investment vs. Harel Insurance Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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