Correlation Between Direct Capital and B Communications
Can any of the company-specific risk be diversified away by investing in both Direct Capital and B Communications 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 Direct Capital and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Capital Investments and B Communications, you can compare the effects of market volatilities on Direct Capital and B Communications 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 Direct Capital with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Capital and B Communications.
Diversification Opportunities for Direct Capital and B Communications
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direct and BCOM is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Direct Capital Investments and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Direct Capital 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 Direct Capital Investments are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Direct Capital i.e., Direct Capital and B Communications go up and down completely randomly.
Pair Corralation between Direct Capital and B Communications
Assuming the 90 days trading horizon Direct Capital Investments is expected to under-perform the B Communications. In addition to that, Direct Capital is 3.09 times more volatile than B Communications. It trades about -0.23 of its total potential returns per unit of risk. B Communications is currently generating about 0.33 per unit of volatility. If you would invest 134,400 in B Communications on September 1, 2024 and sell it today you would earn a total of 32,600 from holding B Communications or generate 24.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Capital Investments vs. B Communications
Performance |
| Timeline |
| Direct Capital Inves |
| B Communications |
Direct Capital and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Capital and B Communications
The main advantage of trading using opposite Direct Capital and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Capital position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Direct Capital vs. Nice | Direct Capital vs. The Gold Bond | Direct Capital vs. Bank Leumi Le Israel | Direct Capital vs. ICL Israel Chemicals |
| B Communications vs. Israel China Biotechnology | B Communications vs. The Gold Bond | B Communications vs. Overseas Commerce | B Communications vs. Big Tech 50 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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