Correlation Between Nice and Hilan
Can any of the company-specific risk be diversified away by investing in both Nice and Hilan 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 Nice and Hilan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice and Hilan, you can compare the effects of market volatilities on Nice and Hilan 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 Nice with a short position of Hilan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Hilan.
Diversification Opportunities for Nice and Hilan
Very weak diversification
The 3 months correlation between Nice and Hilan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Hilan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilan and Nice 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 Nice are associated (or correlated) with Hilan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilan has no effect on the direction of Nice i.e., Nice and Hilan go up and down completely randomly.
Pair Corralation between Nice and Hilan
Assuming the 90 days trading horizon Nice is expected to generate 21.86 times less return on investment than Hilan. In addition to that, Nice is 1.76 times more volatile than Hilan. It trades about 0.01 of its total potential returns per unit of risk. Hilan is currently generating about 0.22 per unit of volatility. If you would invest 1,971,000 in Hilan on August 29, 2024 and sell it today you would earn a total of 187,000 from holding Hilan or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice vs. Hilan
Performance |
| Timeline |
| Nice |
| Hilan |
Nice and Hilan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice and Hilan
The main advantage of trading using opposite Nice and Hilan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice position performs unexpectedly, Hilan 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 Hilan will offset losses from the drop in Hilan's long position.| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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