Correlation Between Gold Bond and Retailors
Can any of the company-specific risk be diversified away by investing in both Gold Bond 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 Gold Bond and Retailors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bond and Retailors, you can compare the effects of market volatilities on Gold Bond 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 Gold Bond with a short position of Retailors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bond and Retailors.
Diversification Opportunities for Gold Bond and Retailors
Poor diversification
The 3 months correlation between Gold and Retailors is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bond and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors and Gold Bond 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 The Gold Bond 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 Gold Bond i.e., Gold Bond and Retailors go up and down completely randomly.
Pair Corralation between Gold Bond and Retailors
Assuming the 90 days trading horizon Gold Bond is expected to generate 2.16 times less return on investment than Retailors. But when comparing it to its historical volatility, The Gold Bond is 2.17 times less risky than Retailors. It trades about 0.28 of its potential returns per unit of risk. Retailors is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 641,300 in Retailors on August 29, 2024 and sell it today you would earn a total of 110,200 from holding Retailors or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bond vs. Retailors
Performance |
| Timeline |
| Gold Bond |
| Retailors |
Gold Bond and Retailors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bond and Retailors
The main advantage of trading using opposite Gold Bond and Retailors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bond 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.| Gold Bond vs. Big Shopping Centers | Gold Bond vs. Al Bad Massuot Yitzhak | Gold Bond vs. Harel Insurance Investments | Gold Bond vs. Palram |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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