Correlation Between Israel Shipyards and Israel Corp
Can any of the company-specific risk be diversified away by investing in both Israel Shipyards and Israel Corp 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 Shipyards and Israel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Shipyards and Israel Corp, you can compare the effects of market volatilities on Israel Shipyards and Israel Corp 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 Shipyards with a short position of Israel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Shipyards and Israel Corp.
Diversification Opportunities for Israel Shipyards and Israel Corp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Israel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Israel Shipyards and Israel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Corp and Israel Shipyards 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 Shipyards are associated (or correlated) with Israel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Corp has no effect on the direction of Israel Shipyards i.e., Israel Shipyards and Israel Corp go up and down completely randomly.
Pair Corralation between Israel Shipyards and Israel Corp
Assuming the 90 days trading horizon Israel Shipyards is expected to generate 0.91 times more return on investment than Israel Corp. However, Israel Shipyards is 1.1 times less risky than Israel Corp. It trades about 0.02 of its potential returns per unit of risk. Israel Corp is currently generating about -0.04 per unit of risk. If you would invest 761,175 in Israel Shipyards on September 1, 2024 and sell it today you would earn a total of 40,325 from holding Israel Shipyards or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Shipyards vs. Israel Corp
Performance |
| Timeline |
| Israel Shipyards |
| Israel Corp |
Israel Shipyards and Israel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Shipyards and Israel Corp
The main advantage of trading using opposite Israel Shipyards and Israel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Shipyards position performs unexpectedly, Israel Corp 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 Israel Corp will offset losses from the drop in Israel Corp's long position.| Israel Shipyards vs. Ilex Medical | Israel Shipyards vs. Skyline Investments | Israel Shipyards vs. Elbit Medical Technologies | Israel Shipyards vs. Electreon Wireless |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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