Correlation Between Aura Investments and Arad Investment
Can any of the company-specific risk be diversified away by investing in both Aura Investments and Arad 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 Aura Investments and Arad Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Investments and Arad Investment Industrial, you can compare the effects of market volatilities on Aura Investments and Arad 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 Aura Investments with a short position of Arad Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Investments and Arad Investment.
Diversification Opportunities for Aura Investments and Arad Investment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aura and Arad is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aura Investments and Arad Investment Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad Investment Indu and Aura Investments 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 Aura Investments are associated (or correlated) with Arad Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad Investment Indu has no effect on the direction of Aura Investments i.e., Aura Investments and Arad Investment go up and down completely randomly.
Pair Corralation between Aura Investments and Arad Investment
Assuming the 90 days trading horizon Aura Investments is expected to generate 0.65 times more return on investment than Arad Investment. However, Aura Investments is 1.54 times less risky than Arad Investment. It trades about 0.11 of its potential returns per unit of risk. Arad Investment Industrial is currently generating about -0.01 per unit of risk. If you would invest 60,278 in Aura Investments on August 25, 2024 and sell it today you would earn a total of 126,922 from holding Aura Investments or generate 210.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aura Investments vs. Arad Investment Industrial
Performance |
| Timeline |
| Aura Investments |
| Arad Investment Indu |
Aura Investments and Arad Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura Investments and Arad Investment
The main advantage of trading using opposite Aura Investments and Arad Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Investments position performs unexpectedly, Arad 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 Arad Investment will offset losses from the drop in Arad Investment's long position.| Aura Investments vs. Israel Canada | Aura Investments vs. Azrieli Group | Aura Investments vs. Delek Group | Aura Investments vs. Shikun Binui |
| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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