Correlation Between B Communications and Nissan
Can any of the company-specific risk be diversified away by investing in both B Communications and Nissan 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 Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Nissan, you can compare the effects of market volatilities on B Communications and Nissan 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 Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Nissan.
Diversification Opportunities for B Communications and Nissan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCOM and Nissan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Nissan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan has no effect on the direction of B Communications i.e., B Communications and Nissan go up and down completely randomly.
Pair Corralation between B Communications and Nissan
Assuming the 90 days trading horizon B Communications is expected to generate 2.04 times more return on investment than Nissan. However, B Communications is 2.04 times more volatile than Nissan. It trades about 0.39 of its potential returns per unit of risk. Nissan is currently generating about 0.42 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Nissan
Performance |
| Timeline |
| B Communications |
| Nissan |
B Communications and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Nissan
The main advantage of trading using opposite B Communications and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan'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 |
| Nissan vs. Adgar Investments and | Nissan vs. Millennium Food Tech LP | Nissan vs. Willy Food | Nissan vs. Harel Insurance Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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