Correlation Between Black Hills and Ituran Location
Can any of the company-specific risk be diversified away by investing in both Black Hills and Ituran Location 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 Black Hills and Ituran Location into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Ituran Location and, you can compare the effects of market volatilities on Black Hills and Ituran Location 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 Black Hills with a short position of Ituran Location. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Ituran Location.
Diversification Opportunities for Black Hills and Ituran Location
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Ituran is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Ituran Location and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ituran Location and Black Hills 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 Black Hills are associated (or correlated) with Ituran Location. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ituran Location has no effect on the direction of Black Hills i.e., Black Hills and Ituran Location go up and down completely randomly.
Pair Corralation between Black Hills and Ituran Location
Considering the 90-day investment horizon Black Hills is expected to generate 1.34 times less return on investment than Ituran Location. But when comparing it to its historical volatility, Black Hills is 1.09 times less risky than Ituran Location. It trades about 0.3 of its potential returns per unit of risk. Ituran Location and is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,673 in Ituran Location and on September 1, 2024 and sell it today you would earn a total of 343.00 from holding Ituran Location and or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Ituran Location and
Performance |
| Timeline |
| Black Hills |
| Ituran Location |
Black Hills and Ituran Location Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Ituran Location
The main advantage of trading using opposite Black Hills and Ituran Location positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Ituran Location 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 Ituran Location will offset losses from the drop in Ituran Location's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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