Correlation Between Arad Investment and Retailors
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Retailors 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 Retailors 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 Retailors, you can compare the effects of market volatilities on Arad Investment and Retailors 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 Retailors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Retailors.
Diversification Opportunities for Arad Investment and Retailors
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arad and Retailors is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors 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 Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of Arad Investment i.e., Arad Investment and Retailors go up and down completely randomly.
Pair Corralation between Arad Investment and Retailors
Assuming the 90 days trading horizon Arad Investment Industrial is expected to under-perform the Retailors. In addition to that, Arad Investment is 2.2 times more volatile than Retailors. It trades about -0.02 of its total potential returns per unit of risk. Retailors is currently generating about -0.01 per unit of volatility. If you would invest 787,171 in Retailors on August 25, 2024 and sell it today you would lose (121,171) from holding Retailors or give up 15.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Retailors
Performance |
| Timeline |
| Arad Investment Indu |
| Retailors |
Arad Investment and Retailors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Retailors
The main advantage of trading using opposite Arad Investment and Retailors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Retailors 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 Retailors will offset losses from the drop in Retailors' long position.| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors vs. ICL Israel Chemicals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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