Correlation Between Jerusalem and Matrix
Can any of the company-specific risk be diversified away by investing in both Jerusalem and Matrix 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 Jerusalem and Matrix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jerusalem and Matrix, you can compare the effects of market volatilities on Jerusalem and Matrix 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 Jerusalem with a short position of Matrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jerusalem and Matrix.
Diversification Opportunities for Jerusalem and Matrix
Very poor diversification
The 3 months correlation between Jerusalem and Matrix is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jerusalem and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix and Jerusalem 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 Jerusalem are associated (or correlated) with Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Jerusalem i.e., Jerusalem and Matrix go up and down completely randomly.
Pair Corralation between Jerusalem and Matrix
Assuming the 90 days trading horizon Jerusalem is expected to generate 0.83 times more return on investment than Matrix. However, Jerusalem is 1.21 times less risky than Matrix. It trades about 0.78 of its potential returns per unit of risk. Matrix is currently generating about 0.39 per unit of risk. If you would invest 126,200 in Jerusalem on August 29, 2024 and sell it today you would earn a total of 31,300 from holding Jerusalem or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jerusalem vs. Matrix
Performance |
| Timeline |
| Jerusalem |
| Matrix |
Jerusalem and Matrix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jerusalem and Matrix
The main advantage of trading using opposite Jerusalem and Matrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jerusalem position performs unexpectedly, Matrix 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 Matrix will offset losses from the drop in Matrix's long position.| Jerusalem vs. Bank Hapoalim | Jerusalem vs. Israel Discount Bank | Jerusalem vs. Bezeq Israeli Telecommunication | Jerusalem vs. Elbit Systems |
| Matrix vs. Automatic Bank Services | Matrix vs. EN Shoham Business | Matrix vs. Rapac Communication Infrastructure | Matrix vs. Tadiran Hldg |
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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