Correlation Between Ituran Location and EchoStar
Can any of the company-specific risk be diversified away by investing in both Ituran Location and EchoStar 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 EchoStar 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 EchoStar, you can compare the effects of market volatilities on Ituran Location and EchoStar 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 EchoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and EchoStar.
Diversification Opportunities for Ituran Location and EchoStar
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ituran and EchoStar is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar 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 EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Ituran Location i.e., Ituran Location and EchoStar go up and down completely randomly.
Pair Corralation between Ituran Location and EchoStar
Given the investment horizon of 90 days Ituran Location is expected to generate 1.1 times less return on investment than EchoStar. In addition to that, Ituran Location is 1.07 times more volatile than EchoStar. It trades about 0.21 of its total potential returns per unit of risk. EchoStar is currently generating about 0.25 per unit of volatility. If you would invest 2,700 in EchoStar on November 18, 2024 and sell it today you would earn a total of 226.00 from holding EchoStar or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ituran Location and vs. EchoStar
Performance |
| Timeline |
| Ituran Location |
| EchoStar |
Ituran Location and EchoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ituran Location and EchoStar
The main advantage of trading using opposite Ituran Location and EchoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ituran Location position performs unexpectedly, EchoStar 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 EchoStar will offset losses from the drop in EchoStar's long position.| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
| EchoStar vs. ADTRAN Inc | EchoStar vs. Mynaric AG ADR | EchoStar vs. KVH Industries | EchoStar vs. Telesat Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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