Correlation Between Elspec and Shaniv
Can any of the company-specific risk be diversified away by investing in both Elspec and Shaniv 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 Elspec and Shaniv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elspec and Shaniv, you can compare the effects of market volatilities on Elspec and Shaniv 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 Elspec with a short position of Shaniv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elspec and Shaniv.
Diversification Opportunities for Elspec and Shaniv
Very poor diversification
The 3 months correlation between Elspec and Shaniv is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Elspec and Shaniv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaniv and Elspec 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 Elspec are associated (or correlated) with Shaniv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaniv has no effect on the direction of Elspec i.e., Elspec and Shaniv go up and down completely randomly.
Pair Corralation between Elspec and Shaniv
Assuming the 90 days trading horizon Elspec is expected to generate 1.51 times more return on investment than Shaniv. However, Elspec is 1.51 times more volatile than Shaniv. It trades about 0.06 of its potential returns per unit of risk. Shaniv is currently generating about 0.04 per unit of risk. If you would invest 64,922 in Elspec on September 1, 2024 and sell it today you would earn a total of 12,688 from holding Elspec or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elspec vs. Shaniv
Performance |
| Timeline |
| Elspec |
| Shaniv |
Elspec and Shaniv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elspec and Shaniv
The main advantage of trading using opposite Elspec and Shaniv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elspec position performs unexpectedly, Shaniv 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 Shaniv will offset losses from the drop in Shaniv's long position.The idea behind Elspec and Shaniv pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Shaniv vs. Rapac Communication Infrastructure | Shaniv vs. Shufersal | Shaniv vs. Palram | Shaniv vs. Nawi Brothers Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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