Correlation Between Israel China and Big Tech
Can any of the company-specific risk be diversified away by investing in both Israel China and Big Tech 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 China and Big Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and Big Tech 50, you can compare the effects of market volatilities on Israel China and Big Tech 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 China with a short position of Big Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Big Tech.
Diversification Opportunities for Israel China and Big Tech
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Big is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Big Tech 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Tech 50 and Israel China 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 China Biotechnology are associated (or correlated) with Big Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Tech 50 has no effect on the direction of Israel China i.e., Israel China and Big Tech go up and down completely randomly.
Pair Corralation between Israel China and Big Tech
Assuming the 90 days trading horizon Israel China Biotechnology is expected to under-perform the Big Tech. In addition to that, Israel China is 2.39 times more volatile than Big Tech 50. It trades about -0.08 of its total potential returns per unit of risk. Big Tech 50 is currently generating about -0.14 per unit of volatility. If you would invest 20,050 in Big Tech 50 on September 1, 2024 and sell it today you would lose (4,790) from holding Big Tech 50 or give up 23.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Big Tech 50
Performance |
| Timeline |
| Israel China Biotech |
| Big Tech 50 |
Israel China and Big Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Big Tech
The main advantage of trading using opposite Israel China and Big Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Big Tech 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 Big Tech will offset losses from the drop in Big Tech's long position.| Israel China vs. YD More Investments | Israel China vs. Netz Hotels | Israel China vs. YH Dimri Construction | Israel China vs. Aura Investments |
| Big Tech vs. Generation Capital | Big Tech vs. Meitav Dash Investments | Big Tech vs. IBI Inv House | Big Tech vs. Mivtach Shamir |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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