Correlation Between Nice and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nice and Tower Semiconductor 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 Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice and Tower Semiconductor, you can compare the effects of market volatilities on Nice and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Tower Semiconductor.
Diversification Opportunities for Nice and Tower Semiconductor
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nice and Tower is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Nice i.e., Nice and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Nice and Tower Semiconductor
Assuming the 90 days trading horizon Nice is expected to generate 1.08 times more return on investment than Tower Semiconductor. However, Nice is 1.08 times more volatile than Tower Semiconductor. It trades about -0.1 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.33 per unit of risk. If you would invest 6,288,000 in Nice on November 3, 2024 and sell it today you would lose (301,000) from holding Nice or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice vs. Tower Semiconductor
Performance |
| Timeline |
| Nice |
| Tower Semiconductor |
Nice and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice and Tower Semiconductor
The main advantage of trading using opposite Nice and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical Industries |
| Tower Semiconductor vs. Teva Pharmaceutical Industries | Tower Semiconductor vs. Elbit Systems | Tower Semiconductor vs. Nice | Tower Semiconductor vs. Bezeq Israeli Telecommunication |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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