Correlation Between Israel China and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Israel China and Israel Discount 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 Israel Discount 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 Israel Discount Bank, you can compare the effects of market volatilities on Israel China and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Israel Discount.
Diversification Opportunities for Israel China and Israel Discount
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and Israel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Israel China i.e., Israel China and Israel Discount go up and down completely randomly.
Pair Corralation between Israel China and Israel Discount
Assuming the 90 days trading horizon Israel China Biotechnology is expected to under-perform the Israel Discount. In addition to that, Israel China is 2.26 times more volatile than Israel Discount Bank. It trades about -0.1 of its total potential returns per unit of risk. Israel Discount Bank is currently generating about 0.3 per unit of volatility. If you would invest 257,700 in Israel Discount Bank on November 27, 2024 and sell it today you would earn a total of 18,800 from holding Israel Discount Bank or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Israel Discount Bank
Performance |
| Timeline |
| Israel China Biotech |
| Israel Discount Bank |
Israel China and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Israel Discount
The main advantage of trading using opposite Israel China and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.| Israel China vs. B Communications | Israel China vs. IDI Insurance | Israel China vs. Scope Metals Group | Israel China vs. Libra Insurance |
| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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