Correlation Between Kenon Holdings and Israel Corp
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Israel Corp 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 Kenon Holdings and Israel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Israel Corp, you can compare the effects of market volatilities on Kenon Holdings and Israel Corp 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 Kenon Holdings with a short position of Israel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Israel Corp.
Diversification Opportunities for Kenon Holdings and Israel Corp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenon and Israel is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Israel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Corp and Kenon Holdings 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 Kenon Holdings are associated (or correlated) with Israel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Corp has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Israel Corp go up and down completely randomly.
Pair Corralation between Kenon Holdings and Israel Corp
Assuming the 90 days trading horizon Kenon Holdings is expected to generate 2.39 times less return on investment than Israel Corp. But when comparing it to its historical volatility, Kenon Holdings is 1.32 times less risky than Israel Corp. It trades about 0.11 of its potential returns per unit of risk. Israel Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,082,000 in Israel Corp on August 29, 2024 and sell it today you would earn a total of 823,000 from holding Israel Corp or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. Israel Corp
Performance |
| Timeline |
| Kenon Holdings |
| Israel Corp |
Kenon Holdings and Israel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Israel Corp
The main advantage of trading using opposite Kenon Holdings and Israel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Israel Corp 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 Israel Corp will offset losses from the drop in Israel Corp's long position.| Kenon Holdings vs. ICL Israel Chemicals | Kenon Holdings vs. Tower Semiconductor | Kenon Holdings vs. Israel Corp | Kenon Holdings vs. Nova |
| Israel Corp vs. Neto ME Holdings | Israel Corp vs. Aryt Industries | Israel Corp vs. Kerur Holdings | Israel Corp vs. Globrands Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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