Correlation Between Airport City and Electra Co
Can any of the company-specific risk be diversified away by investing in both Airport City and Electra Co 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 Airport City and Electra Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airport City and Electra Co Pr, you can compare the effects of market volatilities on Airport City and Electra Co 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 Airport City with a short position of Electra Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airport City and Electra Co.
Diversification Opportunities for Airport City and Electra Co
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airport and Electra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Airport City and Electra Co Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Co Pr and Airport City 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 Airport City are associated (or correlated) with Electra Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Co Pr has no effect on the direction of Airport City i.e., Airport City and Electra Co go up and down completely randomly.
Pair Corralation between Airport City and Electra Co
Assuming the 90 days trading horizon Airport City is expected to generate 2.81 times less return on investment than Electra Co. But when comparing it to its historical volatility, Airport City is 2.8 times less risky than Electra Co. It trades about 0.36 of its potential returns per unit of risk. Electra Co Pr is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 745,500 in Electra Co Pr on August 29, 2024 and sell it today you would earn a total of 204,500 from holding Electra Co Pr or generate 27.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airport City vs. Electra Co Pr
Performance |
| Timeline |
| Airport City |
| Electra Co Pr |
Airport City and Electra Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airport City and Electra Co
The main advantage of trading using opposite Airport City and Electra Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airport City position performs unexpectedly, Electra Co 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 Electra Co will offset losses from the drop in Electra Co's long position.| Airport City vs. Melisron | Airport City vs. Alony Hetz Properties | Airport City vs. Amot Investments | Airport City vs. Azrieli Group |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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