Correlation Between Brand and TAT Technologies
Can any of the company-specific risk be diversified away by investing in both Brand and TAT Technologies 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 Brand and TAT Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brand Group and TAT Technologies, you can compare the effects of market volatilities on Brand and TAT Technologies 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 Brand with a short position of TAT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brand and TAT Technologies.
Diversification Opportunities for Brand and TAT Technologies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brand and TAT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Brand Group and TAT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAT Technologies and Brand 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 Brand Group are associated (or correlated) with TAT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAT Technologies has no effect on the direction of Brand i.e., Brand and TAT Technologies go up and down completely randomly.
Pair Corralation between Brand and TAT Technologies
Assuming the 90 days trading horizon Brand is expected to generate 2.09 times less return on investment than TAT Technologies. But when comparing it to its historical volatility, Brand Group is 1.71 times less risky than TAT Technologies. It trades about 0.22 of its potential returns per unit of risk. TAT Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 692,000 in TAT Technologies on September 1, 2024 and sell it today you would earn a total of 132,000 from holding TAT Technologies or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brand Group vs. TAT Technologies
Performance |
| Timeline |
| Brand Group |
| TAT Technologies |
Brand and TAT Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brand and TAT Technologies
The main advantage of trading using opposite Brand and TAT Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brand position performs unexpectedly, TAT Technologies 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 TAT Technologies will offset losses from the drop in TAT Technologies' long position.| Brand vs. TAT Technologies | Brand vs. Bank Leumi Le Israel | Brand vs. Wesure Global Tech | Brand vs. Terminal X Online |
| TAT Technologies vs. Orbit Technologies | TAT Technologies vs. Tower Semiconductor | TAT Technologies vs. Elron Electronic Industries | TAT Technologies vs. Elbit Systems |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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