Correlation Between IDI Insurance and Payment Financial
Can any of the company-specific risk be diversified away by investing in both IDI Insurance and Payment Financial 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 Payment Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDI Insurance and Payment Financial Technologies, you can compare the effects of market volatilities on IDI Insurance and Payment Financial 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 Payment Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and Payment Financial.
Diversification Opportunities for IDI Insurance and Payment Financial
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IDI and Payment is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and Payment Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payment Financial 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 Payment Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payment Financial has no effect on the direction of IDI Insurance i.e., IDI Insurance and Payment Financial go up and down completely randomly.
Pair Corralation between IDI Insurance and Payment Financial
Assuming the 90 days trading horizon IDI Insurance is expected to generate 9.84 times less return on investment than Payment Financial. But when comparing it to its historical volatility, IDI Insurance is 2.9 times less risky than Payment Financial. It trades about 0.11 of its potential returns per unit of risk. Payment Financial Technologies is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 25,670 in Payment Financial Technologies on September 4, 2024 and sell it today you would earn a total of 8,940 from holding Payment Financial Technologies or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
IDI Insurance vs. Payment Financial Technologies
Performance |
| Timeline |
| IDI Insurance |
| Payment Financial |
IDI Insurance and Payment Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDI Insurance and Payment Financial
The main advantage of trading using opposite IDI Insurance and Payment Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance position performs unexpectedly, Payment Financial 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 Payment Financial will offset losses from the drop in Payment Financial's long position.| IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Israel Discount Bank | IDI Insurance vs. First International Bank | IDI Insurance vs. Elbit Systems |
| Payment Financial vs. Automatic Bank Services | Payment Financial vs. Utron | Payment Financial vs. Brainsway | Payment Financial vs. Mivne Real Estate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |