Correlation Between Israel Discount and Salomon A
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Salomon A 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 Israel Discount and Salomon A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Salomon A Angel, you can compare the effects of market volatilities on Israel Discount and Salomon A 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 Israel Discount with a short position of Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Salomon A.
Diversification Opportunities for Israel Discount and Salomon A
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Israel and Salomon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Israel Discount i.e., Israel Discount and Salomon A go up and down completely randomly.
Pair Corralation between Israel Discount and Salomon A
Assuming the 90 days trading horizon Israel Discount is expected to generate 10.74 times less return on investment than Salomon A. But when comparing it to its historical volatility, Israel Discount Bank is 3.31 times less risky than Salomon A. It trades about 0.07 of its potential returns per unit of risk. Salomon A Angel is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 328,000 in Salomon A Angel on November 18, 2024 and sell it today you would earn a total of 53,500 from holding Salomon A Angel or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Salomon A Angel
Performance |
| Timeline |
| Israel Discount Bank |
| Salomon A Angel |
Israel Discount and Salomon A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Salomon A
The main advantage of trading using opposite Israel Discount and Salomon A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Salomon A 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 Salomon A will offset losses from the drop in Salomon A's long position.| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
| Salomon A vs. Zanlakol | Salomon A vs. Gan Shmuel | Salomon A vs. Carmit | Salomon A vs. Sano Brunos Enterprises |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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