Correlation Between Israel Discount and Aspen
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Aspen 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 Aspen 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 Aspen Group, you can compare the effects of market volatilities on Israel Discount and Aspen 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 Aspen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Aspen.
Diversification Opportunities for Israel Discount and Aspen
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and Aspen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Aspen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Group 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 Aspen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Group has no effect on the direction of Israel Discount i.e., Israel Discount and Aspen go up and down completely randomly.
Pair Corralation between Israel Discount and Aspen
Assuming the 90 days trading horizon Israel Discount is expected to generate 1.93 times less return on investment than Aspen. But when comparing it to its historical volatility, Israel Discount Bank is 2.52 times less risky than Aspen. It trades about 0.48 of its potential returns per unit of risk. Aspen Group is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 57,260 in Aspen Group on September 1, 2024 and sell it today you would earn a total of 10,720 from holding Aspen Group or generate 18.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Israel Discount Bank vs. Aspen Group
Performance |
Timeline |
Israel Discount Bank |
Aspen Group |
Israel Discount and Aspen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Israel Discount and Aspen
The main advantage of trading using opposite Israel Discount and Aspen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Aspen 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 Aspen will offset losses from the drop in Aspen's long position.Israel Discount vs. Menif Financial Services | Israel Discount vs. Accel Solutions Group | Israel Discount vs. Rani Zim Shopping | Israel Discount vs. Rapac Communication Infrastructure |
Aspen vs. Rapac Communication Infrastructure | Aspen vs. Polyram Plastic Industries | Aspen vs. Israel China Biotechnology | Aspen vs. One Software Technologies |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |