Correlation Between Nova and Global Knafaim
Can any of the company-specific risk be diversified away by investing in both Nova and Global Knafaim 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 Nova and Global Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Global Knafaim Leasing, you can compare the effects of market volatilities on Nova and Global Knafaim 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 Nova with a short position of Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Global Knafaim.
Diversification Opportunities for Nova and Global Knafaim
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nova and Global is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and Nova 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 Nova are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Nova i.e., Nova and Global Knafaim go up and down completely randomly.
Pair Corralation between Nova and Global Knafaim
Assuming the 90 days trading horizon Nova is expected to generate 1.28 times more return on investment than Global Knafaim. However, Nova is 1.28 times more volatile than Global Knafaim Leasing. It trades about 0.07 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.05 per unit of risk. If you would invest 4,206,000 in Nova on September 2, 2024 and sell it today you would earn a total of 2,309,000 from holding Nova or generate 54.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Global Knafaim Leasing
Performance |
| Timeline |
| Nova |
| Global Knafaim Leasing |
Nova and Global Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Global Knafaim
The main advantage of trading using opposite Nova and Global Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Global Knafaim 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 Global Knafaim will offset losses from the drop in Global Knafaim's long position.The idea behind Nova and Global Knafaim Leasing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Knafaim vs. Arad | Global Knafaim vs. Alony Hetz Properties | Global Knafaim vs. Airport City | Global Knafaim vs. Harel Insurance Investments |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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