Correlation Between Israel Discount and Nextage Therapeutics
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Nextage Therapeutics 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 Nextage Therapeutics 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 Nextage Therapeutics, you can compare the effects of market volatilities on Israel Discount and Nextage Therapeutics 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 Nextage Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Nextage Therapeutics.
Diversification Opportunities for Israel Discount and Nextage Therapeutics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Nextage is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics 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 Nextage Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextage Therapeutics has no effect on the direction of Israel Discount i.e., Israel Discount and Nextage Therapeutics go up and down completely randomly.
Pair Corralation between Israel Discount and Nextage Therapeutics
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.35 times more return on investment than Nextage Therapeutics. However, Israel Discount Bank is 2.85 times less risky than Nextage Therapeutics. It trades about 0.22 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 249,200 in Israel Discount Bank on November 1, 2024 and sell it today you would earn a total of 13,700 from holding Israel Discount Bank or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Israel Discount Bank vs. Nextage Therapeutics
Performance |
| Timeline |
| Israel Discount Bank |
| Nextage Therapeutics |
Israel Discount and Nextage Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Nextage Therapeutics
The main advantage of trading using opposite Israel Discount and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Nextage Therapeutics 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 Nextage Therapeutics will offset losses from the drop in Nextage Therapeutics' long position.| Israel Discount vs. Safe T Group | Israel Discount vs. WhiteSmoke Software | Israel Discount vs. Foresight Autonomous Holdings | Israel Discount vs. Internet Gold Golden |
| Nextage Therapeutics vs. Global Knafaim Leasing | Nextage Therapeutics vs. Arad Investment Industrial | Nextage Therapeutics vs. IDI Insurance | Nextage Therapeutics vs. Israel Discount Bank |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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