Correlation Between Brainsway and Retailors
Can any of the company-specific risk be diversified away by investing in both Brainsway and Retailors 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 Brainsway and Retailors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brainsway and Retailors, you can compare the effects of market volatilities on Brainsway and Retailors 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 Brainsway with a short position of Retailors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brainsway and Retailors.
Diversification Opportunities for Brainsway and Retailors
Poor diversification
The 3 months correlation between Brainsway and Retailors is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors and Brainsway 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 Brainsway are associated (or correlated) with Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of Brainsway i.e., Brainsway and Retailors go up and down completely randomly.
Pair Corralation between Brainsway and Retailors
Assuming the 90 days trading horizon Brainsway is expected to under-perform the Retailors. But the stock apears to be less risky and, when comparing its historical volatility, Brainsway is 1.13 times less risky than Retailors. The stock trades about -0.19 of its potential returns per unit of risk. The Retailors is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 652,400 in Retailors on September 3, 2024 and sell it today you would earn a total of 79,200 from holding Retailors or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brainsway vs. Retailors
Performance |
| Timeline |
| Brainsway |
| Retailors |
Brainsway and Retailors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brainsway and Retailors
The main advantage of trading using opposite Brainsway and Retailors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brainsway position performs unexpectedly, Retailors 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 Retailors will offset losses from the drop in Retailors' long position.| Brainsway vs. Retailors | Brainsway vs. Multi Retail Group | Brainsway vs. Migdal Insurance | Brainsway vs. Suny Cellular Communication |
| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors vs. ICL Israel Chemicals |
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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