Correlation Between B Communications and Nice
Can any of the company-specific risk be diversified away by investing in both B Communications and Nice 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 Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Nice, you can compare the effects of market volatilities on B Communications and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Nice.
Diversification Opportunities for B Communications and Nice
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BCOM and Nice is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of B Communications i.e., B Communications and Nice go up and down completely randomly.
Pair Corralation between B Communications and Nice
Assuming the 90 days trading horizon B Communications is expected to generate 0.88 times more return on investment than Nice. However, B Communications is 1.13 times less risky than Nice. It trades about 0.39 of its potential returns per unit of risk. Nice is currently generating about 0.01 per unit of risk. If you would invest 130,000 in B Communications on August 29, 2024 and sell it today you would earn a total of 38,100 from holding B Communications or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Nice
Performance |
| Timeline |
| B Communications |
| Nice |
B Communications and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Nice
The main advantage of trading using opposite B Communications and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International |
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 Stocks Directory module to find actively traded stocks across global markets.
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