Correlation Between Ituran Location and ADTRAN
Can any of the company-specific risk be diversified away by investing in both Ituran Location and ADTRAN 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 Ituran Location and ADTRAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ituran Location and and ADTRAN Inc, you can compare the effects of market volatilities on Ituran Location and ADTRAN 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 Ituran Location with a short position of ADTRAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and ADTRAN.
Diversification Opportunities for Ituran Location and ADTRAN
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ituran and ADTRAN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and Ituran Location 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 Ituran Location and are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of Ituran Location i.e., Ituran Location and ADTRAN go up and down completely randomly.
Pair Corralation between Ituran Location and ADTRAN
Given the investment horizon of 90 days Ituran Location is expected to generate 5.51 times less return on investment than ADTRAN. But when comparing it to its historical volatility, Ituran Location and is 2.51 times less risky than ADTRAN. It trades about 0.05 of its potential returns per unit of risk. ADTRAN Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 555.00 in ADTRAN Inc on August 27, 2024 and sell it today you would earn a total of 313.00 from holding ADTRAN Inc or generate 56.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ituran Location and vs. ADTRAN Inc
Performance |
| Timeline |
| Ituran Location |
| ADTRAN Inc |
Ituran Location and ADTRAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ituran Location and ADTRAN
The main advantage of trading using opposite Ituran Location and ADTRAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ituran Location position performs unexpectedly, ADTRAN 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 ADTRAN will offset losses from the drop in ADTRAN's long position.| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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