Correlation Between Israel Discount and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Satcom Systems 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 Satcom Systems 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 Satcom Systems, you can compare the effects of market volatilities on Israel Discount and Satcom Systems 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 Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Satcom Systems.
Diversification Opportunities for Israel Discount and Satcom Systems
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Satcom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems 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 Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of Israel Discount i.e., Israel Discount and Satcom Systems go up and down completely randomly.
Pair Corralation between Israel Discount and Satcom Systems
Assuming the 90 days trading horizon Israel Discount is expected to generate 2.97 times less return on investment than Satcom Systems. But when comparing it to its historical volatility, Israel Discount Bank is 2.54 times less risky than Satcom Systems. It trades about 0.07 of its potential returns per unit of risk. Satcom Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,790 in Satcom Systems on August 26, 2024 and sell it today you would earn a total of 3,690 from holding Satcom Systems or generate 132.26% 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. Satcom Systems
Performance |
| Timeline |
| Israel Discount Bank |
| Satcom Systems |
Israel Discount and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Satcom Systems
The main advantage of trading using opposite Israel Discount and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.| Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication | Israel Discount vs. Elbit Systems |
| Satcom Systems vs. Gamatronic Electronic Industries | Satcom Systems vs. Homebiogas | Satcom Systems vs. Aura Investments | Satcom Systems vs. Libra Insurance |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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