Correlation Between Ayalon Holdings and Scope Metals
Can any of the company-specific risk be diversified away by investing in both Ayalon Holdings and Scope Metals 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 Ayalon Holdings and Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayalon Holdings and Scope Metals Group, you can compare the effects of market volatilities on Ayalon Holdings and Scope Metals 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 Ayalon Holdings with a short position of Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayalon Holdings and Scope Metals.
Diversification Opportunities for Ayalon Holdings and Scope Metals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ayalon and Scope is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ayalon Holdings and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals Group and Ayalon Holdings 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 Ayalon Holdings are associated (or correlated) with Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Ayalon Holdings i.e., Ayalon Holdings and Scope Metals go up and down completely randomly.
Pair Corralation between Ayalon Holdings and Scope Metals
Assuming the 90 days trading horizon Ayalon Holdings is expected to generate 1.14 times more return on investment than Scope Metals. However, Ayalon Holdings is 1.14 times more volatile than Scope Metals Group. It trades about 0.21 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.08 per unit of risk. If you would invest 190,800 in Ayalon Holdings on August 31, 2024 and sell it today you would earn a total of 117,700 from holding Ayalon Holdings or generate 61.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.96% |
| Values | Daily Returns |
Ayalon Holdings vs. Scope Metals Group
Performance |
| Timeline |
| Ayalon Holdings |
| Scope Metals Group |
Ayalon Holdings and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayalon Holdings and Scope Metals
The main advantage of trading using opposite Ayalon Holdings and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayalon Holdings position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' long position.| Ayalon Holdings vs. Clal Insurance Enterprises | Ayalon Holdings vs. Migdal Insurance | Ayalon Holdings vs. Harel Insurance Investments | Ayalon Holdings vs. Menora Miv Hld |
| Scope Metals vs. Delek Automotive Systems | Scope Metals vs. Kerur Holdings | Scope Metals vs. Neto ME Holdings | Scope Metals vs. Bank Leumi Le Israel |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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