Correlation Between Israel Canada and Norstar
Can any of the company-specific risk be diversified away by investing in both Israel Canada and Norstar 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 Canada and Norstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Canada and Norstar, you can compare the effects of market volatilities on Israel Canada and Norstar 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 Canada with a short position of Norstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Canada and Norstar.
Diversification Opportunities for Israel Canada and Norstar
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Israel and Norstar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Israel Canada and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar and Israel Canada 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 Canada are associated (or correlated) with Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Israel Canada i.e., Israel Canada and Norstar go up and down completely randomly.
Pair Corralation between Israel Canada and Norstar
Assuming the 90 days trading horizon Israel Canada is expected to generate 1.89 times less return on investment than Norstar. But when comparing it to its historical volatility, Israel Canada is 2.6 times less risky than Norstar. It trades about 0.52 of its potential returns per unit of risk. Norstar is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 110,500 in Norstar on August 28, 2024 and sell it today you would earn a total of 29,500 from holding Norstar or generate 26.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Canada vs. Norstar
Performance |
| Timeline |
| Israel Canada |
| Norstar |
Israel Canada and Norstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Canada and Norstar
The main advantage of trading using opposite Israel Canada and Norstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Canada position performs unexpectedly, Norstar 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 Norstar will offset losses from the drop in Norstar's long position.The idea behind Israel Canada and Norstar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Norstar vs. Israel Canada | Norstar vs. Delek Group | Norstar vs. Shikun Binui | Norstar vs. Israel Discount Bank |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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