Correlation Between Electra and Mediterranean Towers
Can any of the company-specific risk be diversified away by investing in both Electra and Mediterranean Towers 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 Electra and Mediterranean Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra and Mediterranean Towers, you can compare the effects of market volatilities on Electra and Mediterranean Towers 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 Electra with a short position of Mediterranean Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra and Mediterranean Towers.
Diversification Opportunities for Electra and Mediterranean Towers
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electra and Mediterranean is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Electra and Mediterranean Towers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediterranean Towers and Electra 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 Electra are associated (or correlated) with Mediterranean Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediterranean Towers has no effect on the direction of Electra i.e., Electra and Mediterranean Towers go up and down completely randomly.
Pair Corralation between Electra and Mediterranean Towers
Assuming the 90 days trading horizon Electra is expected to generate 1.16 times less return on investment than Mediterranean Towers. But when comparing it to its historical volatility, Electra is 1.5 times less risky than Mediterranean Towers. It trades about 0.78 of its potential returns per unit of risk. Mediterranean Towers is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 80,900 in Mediterranean Towers on September 2, 2024 and sell it today you would earn a total of 17,100 from holding Mediterranean Towers or generate 21.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra vs. Mediterranean Towers
Performance |
| Timeline |
| Electra |
| Mediterranean Towers |
Electra and Mediterranean Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra and Mediterranean Towers
The main advantage of trading using opposite Electra and Mediterranean Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra position performs unexpectedly, Mediterranean Towers 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 Mediterranean Towers will offset losses from the drop in Mediterranean Towers' long position.| Electra vs. Alony Hetz Properties | Electra vs. Melisron | Electra vs. Shufersal | Electra vs. Israel Discount Bank |
| Mediterranean Towers vs. Bezeq Israeli Telecommunication | Mediterranean Towers vs. Brainsway | Mediterranean Towers vs. Mivne Real Estate | Mediterranean Towers vs. Photomyne |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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