Correlation Between Aspen and Israel Canada
Can any of the company-specific risk be diversified away by investing in both Aspen and Israel Canada 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 Aspen and Israel Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Group and Israel Canada, you can compare the effects of market volatilities on Aspen and Israel Canada 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 Aspen with a short position of Israel Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen and Israel Canada.
Diversification Opportunities for Aspen and Israel Canada
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and Israel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Group and Israel Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Canada and Aspen 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 Aspen Group are associated (or correlated) with Israel Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Canada has no effect on the direction of Aspen i.e., Aspen and Israel Canada go up and down completely randomly.
Pair Corralation between Aspen and Israel Canada
Assuming the 90 days trading horizon Aspen Group is expected to generate 1.74 times more return on investment than Israel Canada. However, Aspen is 1.74 times more volatile than Israel Canada. It trades about 0.35 of its potential returns per unit of risk. Israel Canada is currently generating about 0.45 per unit of risk. If you would invest 56,120 in Aspen Group on August 29, 2024 and sell it today you would earn a total of 9,480 from holding Aspen Group or generate 16.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Group vs. Israel Canada
Performance |
| Timeline |
| Aspen Group |
| Israel Canada |
Aspen and Israel Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen and Israel Canada
The main advantage of trading using opposite Aspen and Israel Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen position performs unexpectedly, Israel Canada 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 Israel Canada will offset losses from the drop in Israel Canada's long position.The idea behind Aspen Group and Israel Canada 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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