Correlation Between Mivtach Shamir and Arad Investment
Can any of the company-specific risk be diversified away by investing in both Mivtach Shamir and Arad Investment 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 Mivtach Shamir and Arad Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mivtach Shamir and Arad Investment Industrial, you can compare the effects of market volatilities on Mivtach Shamir and Arad Investment 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 Mivtach Shamir with a short position of Arad Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mivtach Shamir and Arad Investment.
Diversification Opportunities for Mivtach Shamir and Arad Investment
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mivtach and Arad is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mivtach Shamir and Arad Investment Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad Investment Indu and Mivtach Shamir 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 Mivtach Shamir are associated (or correlated) with Arad Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad Investment Indu has no effect on the direction of Mivtach Shamir i.e., Mivtach Shamir and Arad Investment go up and down completely randomly.
Pair Corralation between Mivtach Shamir and Arad Investment
Assuming the 90 days trading horizon Mivtach Shamir is expected to under-perform the Arad Investment. But the stock apears to be less risky and, when comparing its historical volatility, Mivtach Shamir is 1.81 times less risky than Arad Investment. The stock trades about -0.12 of its potential returns per unit of risk. The Arad Investment Industrial is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 1,007,000 in Arad Investment Industrial on September 3, 2024 and sell it today you would earn a total of 364,000 from holding Arad Investment Industrial or generate 36.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mivtach Shamir vs. Arad Investment Industrial
Performance |
| Timeline |
| Mivtach Shamir |
| Arad Investment Indu |
Mivtach Shamir and Arad Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mivtach Shamir and Arad Investment
The main advantage of trading using opposite Mivtach Shamir and Arad Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mivtach Shamir position performs unexpectedly, Arad Investment 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 Arad Investment will offset losses from the drop in Arad Investment's long position.| Mivtach Shamir vs. Bank Hapoalim | Mivtach Shamir vs. Israel Discount Bank | Mivtach Shamir vs. First International Bank | Mivtach Shamir vs. Elbit Systems |
| Arad Investment vs. EN Shoham Business | Arad Investment vs. Accel Solutions Group | Arad Investment vs. Mivtach Shamir | Arad Investment vs. Rani Zim Shopping |
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 Stocks Directory module to find actively traded stocks across global markets.
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