Correlation Between Israel Land and Multi Retail
Can any of the company-specific risk be diversified away by investing in both Israel Land and Multi Retail 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 Multi Retail 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 Multi Retail Group, you can compare the effects of market volatilities on Israel Land and Multi Retail 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 Multi Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and Multi Retail.
Diversification Opportunities for Israel Land and Multi Retail
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Israel and Multi is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Multi Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Retail Group 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 Multi Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Retail Group has no effect on the direction of Israel Land i.e., Israel Land and Multi Retail go up and down completely randomly.
Pair Corralation between Israel Land and Multi Retail
Assuming the 90 days trading horizon Israel Land is expected to generate 1.86 times less return on investment than Multi Retail. But when comparing it to its historical volatility, Israel Land Development is 1.29 times less risky than Multi Retail. It trades about 0.14 of its potential returns per unit of risk. Multi Retail Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 22,060 in Multi Retail Group on September 1, 2024 and sell it today you would earn a total of 81,840 from holding Multi Retail Group or generate 370.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Land Development vs. Multi Retail Group
Performance |
| Timeline |
| Israel Land Development |
| Multi Retail Group |
Israel Land and Multi Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Land and Multi Retail
The main advantage of trading using opposite Israel Land and Multi Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Land position performs unexpectedly, Multi Retail 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 Multi Retail will offset losses from the drop in Multi Retail's long position.| Israel Land vs. Israel Land Development | Israel Land vs. Lapidoth | Israel Land vs. Ilex Medical | Israel Land vs. Aerodrome Group |
| Multi Retail vs. Suny Cellular Communication | Multi Retail vs. Teuza A Fairchild | Multi Retail vs. Israel China Biotechnology | Multi Retail vs. B Communications |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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