Correlation Between Discount Investment and Clal Industries
Can any of the company-specific risk be diversified away by investing in both Discount Investment and Clal Industries 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 Discount Investment and Clal Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discount Investment Corp and Clal Industries and, you can compare the effects of market volatilities on Discount Investment and Clal Industries 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 Discount Investment with a short position of Clal Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and Clal Industries.
Diversification Opportunities for Discount Investment and Clal Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Discount and Clal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and Discount Investment 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 Discount Investment Corp are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Discount Investment i.e., Discount Investment and Clal Industries go up and down completely randomly.
Pair Corralation between Discount Investment and Clal Industries
Assuming the 90 days trading horizon Discount Investment Corp is expected to generate 1.38 times more return on investment than Clal Industries. However, Discount Investment is 1.38 times more volatile than Clal Industries and. It trades about 0.28 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.32 per unit of risk. If you would invest 39,450 in Discount Investment Corp on August 29, 2024 and sell it today you would earn a total of 7,850 from holding Discount Investment Corp or generate 19.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. Clal Industries and
Performance |
| Timeline |
| Discount Investment Corp |
| Clal Industries |
Discount Investment and Clal Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and Clal Industries
The main advantage of trading using opposite Discount Investment and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment position performs unexpectedly, Clal Industries 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 Clal Industries will offset losses from the drop in Clal Industries' long position.| Discount Investment vs. Ormat Technologies | Discount Investment vs. Multi Retail Group | Discount Investment vs. Nova | Discount Investment vs. B Communications |
| Clal Industries vs. Discount Investment Corp | Clal Industries vs. GODM Investments | Clal Industries vs. Abra Information Technologies | Clal Industries vs. Analyst IMS Investment |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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