Correlation Between Discount Investment and SR Accord
Can any of the company-specific risk be diversified away by investing in both Discount Investment and SR Accord 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 SR Accord 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 SR Accord, you can compare the effects of market volatilities on Discount Investment and SR Accord 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 SR Accord. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and SR Accord.
Diversification Opportunities for Discount Investment and SR Accord
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discount and SRAC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and SR Accord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SR Accord 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 SR Accord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SR Accord has no effect on the direction of Discount Investment i.e., Discount Investment and SR Accord go up and down completely randomly.
Pair Corralation between Discount Investment and SR Accord
Assuming the 90 days trading horizon Discount Investment Corp is expected to generate 2.52 times more return on investment than SR Accord. However, Discount Investment is 2.52 times more volatile than SR Accord. It trades about 0.22 of its potential returns per unit of risk. SR Accord is currently generating about 0.23 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. SR Accord
Performance |
| Timeline |
| Discount Investment Corp |
| SR Accord |
Discount Investment and SR Accord Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and SR Accord
The main advantage of trading using opposite Discount Investment and SR Accord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment position performs unexpectedly, SR Accord 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 SR Accord will offset losses from the drop in SR Accord'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 |
| SR Accord vs. EN Shoham Business | SR Accord vs. Rani Zim Shopping | SR Accord vs. Mivtach Shamir | SR Accord vs. Accel Solutions Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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