Correlation Between Israel Opportunity and Multi Retail
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity and Multi Retail 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 Opportunity and Multi Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and Multi Retail Group, you can compare the effects of market volatilities on Israel Opportunity and Multi Retail 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 Opportunity with a short position of Multi Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and Multi Retail.
Diversification Opportunities for Israel Opportunity and Multi Retail
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Multi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and Multi Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Retail Group and Israel Opportunity 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 Opportunity are associated (or correlated) with Multi Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Retail Group has no effect on the direction of Israel Opportunity i.e., Israel Opportunity and Multi Retail go up and down completely randomly.
Pair Corralation between Israel Opportunity and Multi Retail
Assuming the 90 days trading horizon Israel Opportunity is expected to under-perform the Multi Retail. In addition to that, Israel Opportunity is 1.11 times more volatile than Multi Retail Group. It trades about -0.12 of its total potential returns per unit of risk. Multi Retail Group is currently generating about 0.13 per unit of volatility. If you would invest 101,300 in Multi Retail Group on August 29, 2024 and sell it today you would earn a total of 6,400 from holding Multi Retail Group or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. Multi Retail Group
Performance |
| Timeline |
| Israel Opportunity |
| Multi Retail Group |
Israel Opportunity and Multi Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and Multi Retail
The main advantage of trading using opposite Israel Opportunity and Multi Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity position performs unexpectedly, Multi Retail 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 Multi Retail will offset losses from the drop in Multi Retail's long position.| Israel Opportunity vs. Lapidoth | Israel Opportunity vs. Ilex Medical | Israel Opportunity vs. Aerodrome Group | Israel Opportunity vs. Opal Balance |
| Multi Retail vs. Opal Balance | Multi Retail vs. B Communications | Multi Retail vs. Holmes Place International | Multi Retail vs. Nova |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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