Correlation Between Evogene and Strauss
Can any of the company-specific risk be diversified away by investing in both Evogene and Strauss 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 Evogene and Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evogene and Strauss Group, you can compare the effects of market volatilities on Evogene and Strauss 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 Evogene with a short position of Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evogene and Strauss.
Diversification Opportunities for Evogene and Strauss
Excellent diversification
The 3 months correlation between Evogene and Strauss is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Evogene and Strauss Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strauss Group and Evogene 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 Evogene are associated (or correlated) with Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strauss Group has no effect on the direction of Evogene i.e., Evogene and Strauss go up and down completely randomly.
Pair Corralation between Evogene and Strauss
Assuming the 90 days trading horizon Evogene is expected to under-perform the Strauss. In addition to that, Evogene is 1.96 times more volatile than Strauss Group. It trades about -0.3 of its total potential returns per unit of risk. Strauss Group is currently generating about 0.54 per unit of volatility. If you would invest 707,700 in Strauss Group on November 27, 2024 and sell it today you would earn a total of 80,300 from holding Strauss Group or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evogene vs. Strauss Group
Performance |
| Timeline |
| Evogene |
| Strauss Group |
Evogene and Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evogene and Strauss
The main advantage of trading using opposite Evogene and Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evogene position performs unexpectedly, Strauss 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 Strauss will offset losses from the drop in Strauss' long position.The idea behind Evogene and Strauss Group 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.| Strauss vs. Shufersal | Strauss vs. Israel Discount Bank | Strauss vs. Bank Leumi Le Israel | Strauss vs. Azrieli 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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