Correlation Between Dan Hotels and Isracard
Can any of the company-specific risk be diversified away by investing in both Dan Hotels and Isracard 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 Dan Hotels and Isracard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dan Hotels and Isracard, you can compare the effects of market volatilities on Dan Hotels and Isracard 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 Dan Hotels with a short position of Isracard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dan Hotels and Isracard.
Diversification Opportunities for Dan Hotels and Isracard
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dan and Isracard is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Isracard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isracard and Dan Hotels 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 Dan Hotels are associated (or correlated) with Isracard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isracard has no effect on the direction of Dan Hotels i.e., Dan Hotels and Isracard go up and down completely randomly.
Pair Corralation between Dan Hotels and Isracard
Assuming the 90 days trading horizon Dan Hotels is expected to under-perform the Isracard. In addition to that, Dan Hotels is 1.27 times more volatile than Isracard. It trades about -0.08 of its total potential returns per unit of risk. Isracard is currently generating about -0.03 per unit of volatility. If you would invest 146,500 in Isracard on August 28, 2024 and sell it today you would lose (1,100) from holding Isracard or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dan Hotels vs. Isracard
Performance |
| Timeline |
| Dan Hotels |
| Isracard |
Dan Hotels and Isracard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dan Hotels and Isracard
The main advantage of trading using opposite Dan Hotels and Isracard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels position performs unexpectedly, Isracard 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 Isracard will offset losses from the drop in Isracard's long position.| Dan Hotels vs. Direct Capital Investments | Dan Hotels vs. Safe T Group | Dan Hotels vs. Israel China Biotechnology | Dan Hotels vs. Biomedix Incubator |
| Isracard vs. Bank Hapoalim | Isracard vs. Bank Leumi Le Israel | Isracard vs. Mizrahi Tefahot | Isracard vs. Israel Discount Bank |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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