Correlation Between Itay Financial and Dan Hotels
Can any of the company-specific risk be diversified away by investing in both Itay Financial and Dan Hotels 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 Itay Financial and Dan Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itay Financial AA and Dan Hotels, you can compare the effects of market volatilities on Itay Financial and Dan Hotels 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 Itay Financial with a short position of Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Dan Hotels.
Diversification Opportunities for Itay Financial and Dan Hotels
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Itay and Dan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Itay Financial 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 Itay Financial AA are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Itay Financial i.e., Itay Financial and Dan Hotels go up and down completely randomly.
Pair Corralation between Itay Financial and Dan Hotels
Assuming the 90 days trading horizon Itay Financial AA is expected to generate 3.31 times more return on investment than Dan Hotels. However, Itay Financial is 3.31 times more volatile than Dan Hotels. It trades about 0.18 of its potential returns per unit of risk. Dan Hotels is currently generating about -0.1 per unit of risk. If you would invest 28,070 in Itay Financial AA on September 1, 2024 and sell it today you would earn a total of 4,350 from holding Itay Financial AA or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itay Financial AA vs. Dan Hotels
Performance |
| Timeline |
| Itay Financial AA |
| Dan Hotels |
Itay Financial and Dan Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itay Financial and Dan Hotels
The main advantage of trading using opposite Itay Financial and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itay Financial position performs unexpectedly, Dan Hotels 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 Dan Hotels will offset losses from the drop in Dan Hotels' long position.| Itay Financial vs. Harel Insurance Investments | Itay Financial vs. Teuza A Fairchild | Itay Financial vs. Blender Financial Technologies | Itay Financial vs. Gamatronic Electronic Industries |
| Dan Hotels vs. El Al Israel | Dan Hotels vs. Magic Software Enterprises | Dan Hotels vs. Neto Malinda | Dan Hotels vs. Orbit Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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