Correlation Between Israel Discount and Israel China
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Israel China 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 Israel China 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 Israel China Biotechnology, you can compare the effects of market volatilities on Israel Discount and Israel China 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 Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Israel China.
Diversification Opportunities for Israel Discount and Israel China
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and Israel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech 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 Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of Israel Discount i.e., Israel Discount and Israel China go up and down completely randomly.
Pair Corralation between Israel Discount and Israel China
Assuming the 90 days trading horizon Israel Discount is expected to generate 18.24 times less return on investment than Israel China. But when comparing it to its historical volatility, Israel Discount Bank is 22.86 times less risky than Israel China. It trades about 0.07 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,300 in Israel China Biotechnology on September 1, 2024 and sell it today you would earn a total of 41,990 from holding Israel China Biotechnology or generate 341.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Israel China Biotechnology
Performance |
| Timeline |
| Israel Discount Bank |
| Israel China Biotech |
Israel Discount and Israel China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Israel China
The main advantage of trading using opposite Israel Discount and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Israel China 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 Israel China will offset losses from the drop in Israel China'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 |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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