Correlation Between Nawi Brothers and Michman Basad
Can any of the company-specific risk be diversified away by investing in both Nawi Brothers and Michman Basad 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 Nawi Brothers and Michman Basad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nawi Brothers Group and Michman Basad, you can compare the effects of market volatilities on Nawi Brothers and Michman Basad 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 Nawi Brothers with a short position of Michman Basad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nawi Brothers and Michman Basad.
Diversification Opportunities for Nawi Brothers and Michman Basad
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nawi and Michman is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nawi Brothers Group and Michman Basad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Michman Basad and Nawi Brothers 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 Nawi Brothers Group are associated (or correlated) with Michman Basad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Michman Basad has no effect on the direction of Nawi Brothers i.e., Nawi Brothers and Michman Basad go up and down completely randomly.
Pair Corralation between Nawi Brothers and Michman Basad
Assuming the 90 days trading horizon Nawi Brothers Group is expected to generate 1.05 times more return on investment than Michman Basad. However, Nawi Brothers is 1.05 times more volatile than Michman Basad. It trades about 0.51 of its potential returns per unit of risk. Michman Basad is currently generating about 0.42 per unit of risk. If you would invest 302,900 in Nawi Brothers Group on August 29, 2024 and sell it today you would earn a total of 44,600 from holding Nawi Brothers Group or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nawi Brothers Group vs. Michman Basad
Performance |
| Timeline |
| Nawi Brothers Group |
| Michman Basad |
Nawi Brothers and Michman Basad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nawi Brothers and Michman Basad
The main advantage of trading using opposite Nawi Brothers and Michman Basad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nawi Brothers position performs unexpectedly, Michman Basad 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 Michman Basad will offset losses from the drop in Michman Basad's long position.| Nawi Brothers vs. Bank Hapoalim | Nawi Brothers vs. Israel Discount Bank | Nawi Brothers vs. Bezeq Israeli Telecommunication | Nawi Brothers vs. Elbit Systems |
| Michman Basad vs. Magic Software Enterprises | Michman Basad vs. Suny Cellular Communication | Michman Basad vs. RSL Electronics | Michman Basad vs. Inrom Construction Industries |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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