Correlation Between Isracard and Fridenson
Can any of the company-specific risk be diversified away by investing in both Isracard and Fridenson 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 Isracard and Fridenson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isracard and Fridenson, you can compare the effects of market volatilities on Isracard and Fridenson 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 Isracard with a short position of Fridenson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isracard and Fridenson.
Diversification Opportunities for Isracard and Fridenson
Very weak diversification
The 3 months correlation between Isracard and Fridenson is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and Fridenson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fridenson and Isracard 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 Isracard are associated (or correlated) with Fridenson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fridenson has no effect on the direction of Isracard i.e., Isracard and Fridenson go up and down completely randomly.
Pair Corralation between Isracard and Fridenson
Assuming the 90 days trading horizon Isracard is expected to generate 1.56 times less return on investment than Fridenson. But when comparing it to its historical volatility, Isracard is 2.53 times less risky than Fridenson. It trades about 0.25 of its potential returns per unit of risk. Fridenson is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 450,000 in Fridenson on November 2, 2024 and sell it today you would earn a total of 80,000 from holding Fridenson or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isracard vs. Fridenson
Performance |
| Timeline |
| Isracard |
| Fridenson |
Isracard and Fridenson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isracard and Fridenson
The main advantage of trading using opposite Isracard and Fridenson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isracard position performs unexpectedly, Fridenson 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 Fridenson will offset losses from the drop in Fridenson's long position.| Isracard vs. Bank Hapoalim | Isracard vs. Bank Leumi Le Israel | Isracard vs. Mizrahi Tefahot | Isracard vs. Israel Discount Bank |
| Fridenson vs. Brimag L | Fridenson vs. Allot Communications | Fridenson vs. Hamat Group | Fridenson vs. Elron Electronic Industries |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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