Correlation Between B Communications and Automatic Bank
Can any of the company-specific risk be diversified away by investing in both B Communications and Automatic Bank 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 Automatic Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Automatic Bank Services, you can compare the effects of market volatilities on B Communications and Automatic Bank 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 Automatic Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Automatic Bank.
Diversification Opportunities for B Communications and Automatic Bank
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BCOM and Automatic is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services 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 Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of B Communications i.e., B Communications and Automatic Bank go up and down completely randomly.
Pair Corralation between B Communications and Automatic Bank
Assuming the 90 days trading horizon B Communications is expected to generate 1.86 times less return on investment than Automatic Bank. But when comparing it to its historical volatility, B Communications is 1.25 times less risky than Automatic Bank. It trades about 0.35 of its potential returns per unit of risk. Automatic Bank Services is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 189,100 in Automatic Bank Services on September 13, 2024 and sell it today you would earn a total of 65,700 from holding Automatic Bank Services or generate 34.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Automatic Bank Services
Performance |
| Timeline |
| B Communications |
| Automatic Bank Services |
B Communications and Automatic Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Automatic Bank
The main advantage of trading using opposite B Communications and Automatic Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Automatic Bank 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 Automatic Bank will offset losses from the drop in Automatic Bank's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
| Automatic Bank vs. Payment Financial Technologies | Automatic Bank vs. Opal Balance | Automatic Bank vs. B Communications | Automatic Bank vs. Mivne Real Estate |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |