Correlation Between Israel Land and Netz Hotels
Can any of the company-specific risk be diversified away by investing in both Israel Land and Netz 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 Israel Land and Netz Hotels 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 Netz Hotels, you can compare the effects of market volatilities on Israel Land and Netz 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 Israel Land with a short position of Netz Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and Netz Hotels.
Diversification Opportunities for Israel Land and Netz Hotels
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Netz is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Netz Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netz Hotels 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 Netz Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netz Hotels has no effect on the direction of Israel Land i.e., Israel Land and Netz Hotels go up and down completely randomly.
Pair Corralation between Israel Land and Netz Hotels
Assuming the 90 days trading horizon Israel Land is expected to generate 1.03 times less return on investment than Netz Hotels. But when comparing it to its historical volatility, Israel Land Development is 1.35 times less risky than Netz Hotels. It trades about 0.34 of its potential returns per unit of risk. Netz Hotels is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Netz Hotels on September 1, 2024 and sell it today you would earn a total of 430.00 from holding Netz Hotels or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Land Development vs. Netz Hotels
Performance |
| Timeline |
| Israel Land Development |
| Netz Hotels |
Israel Land and Netz Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Land and Netz Hotels
The main advantage of trading using opposite Israel Land and Netz Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Land position performs unexpectedly, Netz 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 Netz Hotels will offset losses from the drop in Netz Hotels' long position.| Israel Land vs. Israel Land Development | Israel Land vs. Lapidoth | Israel Land vs. Ilex Medical | Israel Land vs. Aerodrome Group |
| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Brainsway | Netz Hotels vs. Mivne Real Estate | Netz Hotels vs. Photomyne |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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