Correlation Between Big Tech and Inbar Group
Can any of the company-specific risk be diversified away by investing in both Big Tech and Inbar Group 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 Big Tech and Inbar Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Tech 50 and Inbar Group Finance, you can compare the effects of market volatilities on Big Tech and Inbar Group 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 Big Tech with a short position of Inbar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Tech and Inbar Group.
Diversification Opportunities for Big Tech and Inbar Group
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Inbar is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Big Tech 50 and Inbar Group Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inbar Group Finance and Big Tech 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 Big Tech 50 are associated (or correlated) with Inbar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inbar Group Finance has no effect on the direction of Big Tech i.e., Big Tech and Inbar Group go up and down completely randomly.
Pair Corralation between Big Tech and Inbar Group
Assuming the 90 days trading horizon Big Tech 50 is expected to generate 0.34 times more return on investment than Inbar Group. However, Big Tech 50 is 2.96 times less risky than Inbar Group. It trades about -0.03 of its potential returns per unit of risk. Inbar Group Finance is currently generating about -0.03 per unit of risk. If you would invest 17,590 in Big Tech 50 on September 12, 2024 and sell it today you would lose (2,870) from holding Big Tech 50 or give up 16.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Tech 50 vs. Inbar Group Finance
Performance |
| Timeline |
| Big Tech 50 |
| Inbar Group Finance |
Big Tech and Inbar Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Tech and Inbar Group
The main advantage of trading using opposite Big Tech and Inbar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Tech position performs unexpectedly, Inbar Group 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 Inbar Group will offset losses from the drop in Inbar Group's long position.| Big Tech vs. Altshuler Shaham Financial | Big Tech vs. Meitav Dash Investments | Big Tech vs. Mivtach Shamir | Big Tech vs. YD More Investments |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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