Correlation Between Israel Discount and Nice
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Nice 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 Nice 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 Nice, you can compare the effects of market volatilities on Israel Discount and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Nice.
Diversification Opportunities for Israel Discount and Nice
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Israel and Nice is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Israel Discount i.e., Israel Discount and Nice go up and down completely randomly.
Pair Corralation between Israel Discount and Nice
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.64 times more return on investment than Nice. However, Israel Discount Bank is 1.57 times less risky than Nice. It trades about 0.13 of its potential returns per unit of risk. Nice is currently generating about -0.07 per unit of risk. If you would invest 176,411 in Israel Discount Bank on August 25, 2024 and sell it today you would earn a total of 62,989 from holding Israel Discount Bank or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Nice
Performance |
| Timeline |
| Israel Discount Bank |
| Nice |
Israel Discount and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Nice
The main advantage of trading using opposite Israel Discount and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.| Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication | Israel Discount vs. Elbit Systems |
| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical Industries |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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