Correlation Between Discount Investment and GFC Green
Can any of the company-specific risk be diversified away by investing in both Discount Investment and GFC Green 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 GFC Green 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 GFC Green Fields, you can compare the effects of market volatilities on Discount Investment and GFC Green 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 GFC Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and GFC Green.
Diversification Opportunities for Discount Investment and GFC Green
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discount and GFC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and GFC Green Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFC Green Fields 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 GFC Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFC Green Fields has no effect on the direction of Discount Investment i.e., Discount Investment and GFC Green go up and down completely randomly.
Pair Corralation between Discount Investment and GFC Green
Assuming the 90 days trading horizon Discount Investment Corp is expected to generate 6.02 times more return on investment than GFC Green. However, Discount Investment is 6.02 times more volatile than GFC Green Fields. It trades about 0.22 of its potential returns per unit of risk. GFC Green Fields is currently generating about 0.3 per unit of risk. If you would invest 41,130 in Discount Investment Corp on November 28, 2024 and sell it today you would earn a total of 9,070 from holding Discount Investment Corp or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. GFC Green Fields
Performance |
| Timeline |
| Discount Investment Corp |
| GFC Green Fields |
Discount Investment and GFC Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and GFC Green
The main advantage of trading using opposite Discount Investment and GFC Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment position performs unexpectedly, GFC Green 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 GFC Green will offset losses from the drop in GFC Green's long position.| Discount Investment vs. Clal Insurance Enterprises | Discount Investment vs. Israel Discount Bank | Discount Investment vs. Migdal Insurance | Discount Investment vs. Bezeq Israeli Telecommunication |
| GFC Green vs. Willy Food | GFC Green vs. Ormat Technologies | GFC Green vs. ICL Israel Chemicals | GFC Green vs. Imed Infinity Medical Limited |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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