Correlation Between Naphtha and Airport City
Can any of the company-specific risk be diversified away by investing in both Naphtha and Airport City 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 Naphtha and Airport City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naphtha and Airport City, you can compare the effects of market volatilities on Naphtha and Airport City 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 Naphtha with a short position of Airport City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naphtha and Airport City.
Diversification Opportunities for Naphtha and Airport City
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Naphtha and Airport is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Naphtha and Airport City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airport City and Naphtha 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 Naphtha are associated (or correlated) with Airport City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airport City has no effect on the direction of Naphtha i.e., Naphtha and Airport City go up and down completely randomly.
Pair Corralation between Naphtha and Airport City
Assuming the 90 days trading horizon Naphtha is expected to generate 1.06 times more return on investment than Airport City. However, Naphtha is 1.06 times more volatile than Airport City. It trades about 0.7 of its potential returns per unit of risk. Airport City is currently generating about 0.34 per unit of risk. If you would invest 213,000 in Naphtha on August 29, 2024 and sell it today you would earn a total of 44,000 from holding Naphtha or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naphtha vs. Airport City
Performance |
| Timeline |
| Naphtha |
| Airport City |
Naphtha and Airport City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naphtha and Airport City
The main advantage of trading using opposite Naphtha and Airport City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naphtha position performs unexpectedly, Airport City 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 Airport City will offset losses from the drop in Airport City's long position.| Naphtha vs. Migdal Insurance | Naphtha vs. Harel Insurance Investments | Naphtha vs. Delek Automotive Systems | Naphtha vs. Airport City |
| Airport City vs. Melisron | Airport City vs. Alony Hetz Properties | Airport City vs. Amot Investments | Airport City vs. Azrieli 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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