Correlation Between IDI Insurance and Dan Hotels
Can any of the company-specific risk be diversified away by investing in both IDI Insurance and Dan Hotels 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 IDI Insurance and Dan Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDI Insurance and Dan Hotels, you can compare the effects of market volatilities on IDI Insurance and Dan Hotels 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 IDI Insurance with a short position of Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and Dan Hotels.
Diversification Opportunities for IDI Insurance and Dan Hotels
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IDI and Dan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and IDI Insurance 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 IDI Insurance are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of IDI Insurance i.e., IDI Insurance and Dan Hotels go up and down completely randomly.
Pair Corralation between IDI Insurance and Dan Hotels
Assuming the 90 days trading horizon IDI Insurance is expected to generate 1.28 times more return on investment than Dan Hotels. However, IDI Insurance is 1.28 times more volatile than Dan Hotels. It trades about 0.22 of its potential returns per unit of risk. Dan Hotels is currently generating about 0.02 per unit of risk. If you would invest 1,275,000 in IDI Insurance on August 27, 2024 and sell it today you would earn a total of 88,000 from holding IDI Insurance or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDI Insurance vs. Dan Hotels
Performance |
| Timeline |
| IDI Insurance |
| Dan Hotels |
IDI Insurance and Dan Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDI Insurance and Dan Hotels
The main advantage of trading using opposite IDI Insurance and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance position performs unexpectedly, Dan Hotels 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 Dan Hotels will offset losses from the drop in Dan Hotels' long position.| IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Israel Discount Bank | IDI Insurance vs. Bezeq Israeli Telecommunication | IDI Insurance vs. Elbit Systems |
| Dan Hotels vs. Rimon Consulting Management | Dan Hotels vs. IDI Insurance | Dan Hotels vs. Victory Supermarket Chain | Dan Hotels vs. Migdal Insurance |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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