Correlation Between Nova and Shufersal
Can any of the company-specific risk be diversified away by investing in both Nova and Shufersal 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 Shufersal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Shufersal, you can compare the effects of market volatilities on Nova and Shufersal 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 Shufersal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Shufersal.
Diversification Opportunities for Nova and Shufersal
Weak diversification
The 3 months correlation between Nova and Shufersal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal 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 Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Nova i.e., Nova and Shufersal go up and down completely randomly.
Pair Corralation between Nova and Shufersal
Assuming the 90 days trading horizon Nova is expected to generate 2.71 times more return on investment than Shufersal. However, Nova is 2.71 times more volatile than Shufersal. It trades about 0.19 of its potential returns per unit of risk. Shufersal is currently generating about 0.04 per unit of risk. If you would invest 8,010,000 in Nova on November 28, 2024 and sell it today you would earn a total of 971,000 from holding Nova or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Shufersal
Performance |
| Timeline |
| Nova |
| Shufersal |
Nova and Shufersal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Shufersal
The main advantage of trading using opposite Nova and Shufersal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Shufersal 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 Shufersal will offset losses from the drop in Shufersal's long position.The idea behind Nova and Shufersal 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.| Shufersal vs. Rami Levi | Shufersal vs. Bezeq Israeli Telecommunication | Shufersal vs. Bank Hapoalim | Shufersal vs. Bank Leumi Le Israel |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |