Correlation Between Naphtha and Israel Opportunity
Can any of the company-specific risk be diversified away by investing in both Naphtha and Israel Opportunity 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 Israel Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naphtha and Israel Opportunity , you can compare the effects of market volatilities on Naphtha and Israel Opportunity 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 Israel Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naphtha and Israel Opportunity.
Diversification Opportunities for Naphtha and Israel Opportunity
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Naphtha and Israel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Naphtha and Israel Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Opportunity 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 Israel Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Opportunity has no effect on the direction of Naphtha i.e., Naphtha and Israel Opportunity go up and down completely randomly.
Pair Corralation between Naphtha and Israel Opportunity
Assuming the 90 days trading horizon Naphtha is expected to generate 0.47 times more return on investment than Israel Opportunity. However, Naphtha is 2.11 times less risky than Israel Opportunity. It trades about 0.7 of its potential returns per unit of risk. Israel Opportunity is currently generating about -0.12 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naphtha vs. Israel Opportunity
Performance |
| Timeline |
| Naphtha |
| Israel Opportunity |
Naphtha and Israel Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naphtha and Israel Opportunity
The main advantage of trading using opposite Naphtha and Israel Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naphtha position performs unexpectedly, Israel Opportunity 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 Opportunity will offset losses from the drop in Israel Opportunity's long position.| Naphtha vs. Migdal Insurance | Naphtha vs. Harel Insurance Investments | Naphtha vs. Delek Automotive Systems | Naphtha vs. Airport City |
| Israel Opportunity vs. Lapidoth | Israel Opportunity vs. Ilex Medical | Israel Opportunity vs. Aerodrome Group | Israel Opportunity vs. Opal Balance |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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