Correlation Between Isracard and Shaniv
Can any of the company-specific risk be diversified away by investing in both Isracard and Shaniv 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 Shaniv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isracard and Shaniv, you can compare the effects of market volatilities on Isracard and Shaniv 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 Shaniv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isracard and Shaniv.
Diversification Opportunities for Isracard and Shaniv
Very poor diversification
The 3 months correlation between Isracard and Shaniv is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and Shaniv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaniv 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 Shaniv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaniv has no effect on the direction of Isracard i.e., Isracard and Shaniv go up and down completely randomly.
Pair Corralation between Isracard and Shaniv
Assuming the 90 days trading horizon Isracard is expected to generate 2.98 times less return on investment than Shaniv. But when comparing it to its historical volatility, Isracard is 3.36 times less risky than Shaniv. It trades about 0.19 of its potential returns per unit of risk. Shaniv is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 47,900 in Shaniv on November 3, 2024 and sell it today you would earn a total of 4,200 from holding Shaniv or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isracard vs. Shaniv
Performance |
| Timeline |
| Isracard |
| Shaniv |
Isracard and Shaniv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isracard and Shaniv
The main advantage of trading using opposite Isracard and Shaniv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isracard position performs unexpectedly, Shaniv 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 Shaniv will offset losses from the drop in Shaniv's long position.| Isracard vs. Bank Hapoalim | Isracard vs. Bank Leumi Le Israel | Isracard vs. Mizrahi Tefahot | Isracard vs. Israel Discount Bank |
| Shaniv vs. Rapac Communication Infrastructure | Shaniv vs. Shufersal | Shaniv vs. Palram | Shaniv vs. Nawi Brothers Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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