Correlation Between Israel Land and Israel Shipyards
Can any of the company-specific risk be diversified away by investing in both Israel Land and Israel Shipyards 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 Land and Israel Shipyards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Land Development and Israel Shipyards, you can compare the effects of market volatilities on Israel Land and Israel Shipyards 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 Land with a short position of Israel Shipyards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and Israel Shipyards.
Diversification Opportunities for Israel Land and Israel Shipyards
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and Israel is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Israel Shipyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Shipyards and Israel Land 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 Land Development are associated (or correlated) with Israel Shipyards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Shipyards has no effect on the direction of Israel Land i.e., Israel Land and Israel Shipyards go up and down completely randomly.
Pair Corralation between Israel Land and Israel Shipyards
Assuming the 90 days trading horizon Israel Land Development is expected to under-perform the Israel Shipyards. But the stock apears to be less risky and, when comparing its historical volatility, Israel Land Development is 1.48 times less risky than Israel Shipyards. The stock trades about -0.37 of its potential returns per unit of risk. The Israel Shipyards is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,145,000 in Israel Shipyards on November 27, 2024 and sell it today you would earn a total of 20,000 from holding Israel Shipyards or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Land Development vs. Israel Shipyards
Performance |
| Timeline |
| Israel Land Development |
| Israel Shipyards |
Israel Land and Israel Shipyards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Land and Israel Shipyards
The main advantage of trading using opposite Israel Land and Israel Shipyards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Land position performs unexpectedly, Israel Shipyards 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 Shipyards will offset losses from the drop in Israel Shipyards' long position.| Israel Land vs. Israel Land Development | Israel Land vs. Lapidoth | Israel Land vs. Ilex Medical | Israel Land vs. Aerodrome Group |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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