Correlation Between B Communications and Gold Bond
Can any of the company-specific risk be diversified away by investing in both B Communications and Gold Bond 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 Gold Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and The Gold Bond, you can compare the effects of market volatilities on B Communications and Gold Bond 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 Gold Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Gold Bond.
Diversification Opportunities for B Communications and Gold Bond
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCOM and Gold is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond 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 Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of B Communications i.e., B Communications and Gold Bond go up and down completely randomly.
Pair Corralation between B Communications and Gold Bond
Assuming the 90 days trading horizon B Communications is expected to generate 1.49 times more return on investment than Gold Bond. However, B Communications is 1.49 times more volatile than The Gold Bond. It trades about 0.25 of its potential returns per unit of risk. The Gold Bond is currently generating about 0.24 per unit of risk. If you would invest 116,400 in B Communications on November 2, 2024 and sell it today you would earn a total of 75,200 from holding B Communications or generate 64.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.77% |
| Values | Daily Returns |
B Communications vs. The Gold Bond
Performance |
| Timeline |
| B Communications |
| Gold Bond |
B Communications and Gold Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Gold Bond
The main advantage of trading using opposite B Communications and Gold Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Gold Bond 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 Gold Bond will offset losses from the drop in Gold Bond's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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