Correlation Between B Communications and Erika Carmel
Can any of the company-specific risk be diversified away by investing in both B Communications and Erika Carmel 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 B Communications and Erika Carmel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Erika Carmel, you can compare the effects of market volatilities on B Communications and Erika Carmel 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 B Communications with a short position of Erika Carmel. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Erika Carmel.
Diversification Opportunities for B Communications and Erika Carmel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BCOM and Erika is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Erika Carmel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erika Carmel and B Communications 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 B Communications are associated (or correlated) with Erika Carmel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erika Carmel has no effect on the direction of B Communications i.e., B Communications and Erika Carmel go up and down completely randomly.
Pair Corralation between B Communications and Erika Carmel
Assuming the 90 days trading horizon B Communications is expected to generate 1.09 times more return on investment than Erika Carmel. However, B Communications is 1.09 times more volatile than Erika Carmel. It trades about 0.38 of its potential returns per unit of risk. Erika Carmel is currently generating about -0.15 per unit of risk. If you would invest 131,200 in B Communications on August 30, 2024 and sell it today you would earn a total of 36,800 from holding B Communications or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Erika Carmel
Performance |
| Timeline |
| B Communications |
| Erika Carmel |
B Communications and Erika Carmel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Erika Carmel
The main advantage of trading using opposite B Communications and Erika Carmel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Erika Carmel 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 Erika Carmel will offset losses from the drop in Erika Carmel's long position.| B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International | B Communications vs. Nova |
| Erika Carmel vs. One Software Technologies | Erika Carmel vs. Magic Software Enterprises | Erika Carmel vs. Sofwave Medical | Erika Carmel vs. Scope Metals Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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