Correlation Between Direct Finance and Itay Financial
Can any of the company-specific risk be diversified away by investing in both Direct Finance and Itay Financial 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 Finance and Itay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Finance TA and Itay Financial AA, you can compare the effects of market volatilities on Direct Finance and Itay Financial 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 Finance with a short position of Itay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Finance and Itay Financial.
Diversification Opportunities for Direct Finance and Itay Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direct and Itay is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Direct Finance TA and Itay Financial AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itay Financial AA and Direct Finance 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 Finance TA are associated (or correlated) with Itay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itay Financial AA has no effect on the direction of Direct Finance i.e., Direct Finance and Itay Financial go up and down completely randomly.
Pair Corralation between Direct Finance and Itay Financial
Assuming the 90 days trading horizon Direct Finance is expected to generate 10.96 times less return on investment than Itay Financial. But when comparing it to its historical volatility, Direct Finance TA is 10.38 times less risky than Itay Financial. It trades about 0.15 of its potential returns per unit of risk. Itay Financial AA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 35,950 in Itay Financial AA on November 3, 2024 and sell it today you would earn a total of 10,550 from holding Itay Financial AA or generate 29.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Finance TA vs. Itay Financial AA
Performance |
| Timeline |
| Direct Finance TA |
| Itay Financial AA |
Direct Finance and Itay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Finance and Itay Financial
The main advantage of trading using opposite Direct Finance and Itay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Finance position performs unexpectedly, Itay Financial 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 Itay Financial will offset losses from the drop in Itay Financial's long position.| Direct Finance vs. Clal Insurance Enterprises | Direct Finance vs. Delek Automotive Systems | Direct Finance vs. IDI Insurance | Direct Finance vs. First International Bank |
| Itay Financial vs. Elron Electronic Industries | Itay Financial vs. Oron Group Investments | Itay Financial vs. Feat Fund Investments | Itay Financial vs. Aura Investments |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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