Correlation Between Libra Insurance and B Communications
Can any of the company-specific risk be diversified away by investing in both Libra Insurance and B Communications 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 Libra Insurance and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Libra Insurance and B Communications, you can compare the effects of market volatilities on Libra Insurance and B Communications 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 Libra Insurance with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Libra Insurance and B Communications.
Diversification Opportunities for Libra Insurance and B Communications
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Libra and BCOM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Libra Insurance and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Libra Insurance 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 Libra Insurance are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Libra Insurance i.e., Libra Insurance and B Communications go up and down completely randomly.
Pair Corralation between Libra Insurance and B Communications
Assuming the 90 days trading horizon Libra Insurance is expected to generate 1.01 times less return on investment than B Communications. But when comparing it to its historical volatility, Libra Insurance is 1.68 times less risky than B Communications. It trades about 0.63 of its potential returns per unit of risk. B Communications is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 118,000 in B Communications on August 25, 2024 and sell it today you would earn a total of 47,600 from holding B Communications or generate 40.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Libra Insurance vs. B Communications
Performance |
| Timeline |
| Libra Insurance |
| B Communications |
Libra Insurance and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Libra Insurance and B Communications
The main advantage of trading using opposite Libra Insurance and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Libra Insurance position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Libra Insurance vs. Elbit Medical Technologies | Libra Insurance vs. Victory Supermarket Chain | Libra Insurance vs. Terminal X Online | Libra Insurance vs. Azorim Investment Development |
| B Communications vs. Bank Leumi Le Israel | B Communications vs. Teva Pharmaceutical Industries | B Communications vs. Bank Hapoalim | B Communications vs. Elbit Systems |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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