Correlation Between Itay Financial and RSL Electronics
Can any of the company-specific risk be diversified away by investing in both Itay Financial and RSL Electronics 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 RSL Electronics 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 RSL Electronics, you can compare the effects of market volatilities on Itay Financial and RSL Electronics 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 RSL Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and RSL Electronics.
Diversification Opportunities for Itay Financial and RSL Electronics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Itay and RSL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and RSL Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RSL Electronics 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 RSL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RSL Electronics has no effect on the direction of Itay Financial i.e., Itay Financial and RSL Electronics go up and down completely randomly.
Pair Corralation between Itay Financial and RSL Electronics
Assuming the 90 days trading horizon Itay Financial AA is expected to generate 2.25 times more return on investment than RSL Electronics. However, Itay Financial is 2.25 times more volatile than RSL Electronics. It trades about 0.12 of its potential returns per unit of risk. RSL Electronics is currently generating about 0.12 per unit of risk. If you would invest 23,900 in Itay Financial AA on September 13, 2024 and sell it today you would earn a total of 15,000 from holding Itay Financial AA or generate 62.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itay Financial AA vs. RSL Electronics
Performance |
| Timeline |
| Itay Financial AA |
| RSL Electronics |
Itay Financial and RSL Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itay Financial and RSL Electronics
The main advantage of trading using opposite Itay Financial and RSL Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itay Financial position performs unexpectedly, RSL Electronics 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 RSL Electronics will offset losses from the drop in RSL Electronics' long position.| Itay Financial vs. Direct Capital Investments | Itay Financial vs. Netz Hotels | Itay Financial vs. Opal Balance | Itay Financial vs. B Communications |
| RSL Electronics vs. Aran Research and | RSL Electronics vs. Al Bad Massuot Yitzhak | RSL Electronics vs. Analyst IMS Investment | RSL Electronics vs. Golan Plastic |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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