Correlation Between B Communications and Ravad
Can any of the company-specific risk be diversified away by investing in both B Communications and Ravad 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 Ravad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Ravad, you can compare the effects of market volatilities on B Communications and Ravad 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 Ravad. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Ravad.
Diversification Opportunities for B Communications and Ravad
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCOM and Ravad is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Ravad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ravad 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 Ravad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ravad has no effect on the direction of B Communications i.e., B Communications and Ravad go up and down completely randomly.
Pair Corralation between B Communications and Ravad
Assuming the 90 days trading horizon B Communications is expected to generate 1.05 times more return on investment than Ravad. However, B Communications is 1.05 times more volatile than Ravad. It trades about 0.35 of its potential returns per unit of risk. Ravad is currently generating about -0.04 per unit of risk. If you would invest 170,500 in B Communications on October 21, 2024 and sell it today you would earn a total of 25,400 from holding B Communications or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Ravad
Performance |
| Timeline |
| B Communications |
| Ravad |
B Communications and Ravad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Ravad
The main advantage of trading using opposite B Communications and Ravad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Ravad 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 Ravad will offset losses from the drop in Ravad's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
| Ravad vs. Israel Canada | Ravad vs. Alony Hetz Properties | Ravad vs. Bank Leumi Le Israel | Ravad vs. Shikun Binui |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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