Correlation Between Israel Discount and Absa Group
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Absa Group 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 Discount and Absa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Absa Group Limited, you can compare the effects of market volatilities on Israel Discount and Absa Group 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 Discount with a short position of Absa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Absa Group.
Diversification Opportunities for Israel Discount and Absa Group
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Absa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Absa Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group Limited and Israel Discount 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 Discount Bank are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group Limited has no effect on the direction of Israel Discount i.e., Israel Discount and Absa Group go up and down completely randomly.
Pair Corralation between Israel Discount and Absa Group
If you would invest 811.00 in Absa Group Limited on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Absa Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Absa Group Limited
Performance |
| Timeline |
| Israel Discount Bank |
| Absa Group Limited |
Israel Discount and Absa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Absa Group
The main advantage of trading using opposite Israel Discount and Absa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Absa Group 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 Absa Group will offset losses from the drop in Absa Group's long position.| Israel Discount vs. Standard Bank Group | Israel Discount vs. Bank Central Asia | Israel Discount vs. PSB Holdings | Israel Discount vs. United Overseas Bank |
| Absa Group vs. Standard Bank Group | Absa Group vs. Bank Central Asia | Absa Group vs. PSB Holdings | Absa Group vs. United Overseas 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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