Correlation Between Israel Discount and Retailors
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Retailors 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 Retailors 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 Retailors, you can compare the effects of market volatilities on Israel Discount and Retailors 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 Retailors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Retailors.
Diversification Opportunities for Israel Discount and Retailors
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Retailors is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors 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 Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of Israel Discount i.e., Israel Discount and Retailors go up and down completely randomly.
Pair Corralation between Israel Discount and Retailors
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.51 times more return on investment than Retailors. However, Israel Discount Bank is 1.95 times less risky than Retailors. It trades about 0.34 of its potential returns per unit of risk. Retailors is currently generating about 0.13 per unit of risk. If you would invest 208,500 in Israel Discount Bank on August 30, 2024 and sell it today you would earn a total of 36,500 from holding Israel Discount Bank or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Retailors
Performance |
| Timeline |
| Israel Discount Bank |
| Retailors |
Israel Discount and Retailors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Retailors
The main advantage of trading using opposite Israel Discount and Retailors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Retailors 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 Retailors will offset losses from the drop in Retailors' long position.| Israel Discount vs. Elbit Systems | Israel Discount vs. Discount Investment Corp | Israel Discount vs. AudioCodes | Israel Discount vs. Shufersal |
| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors vs. ICL Israel Chemicals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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