Correlation Between Nova and Strauss
Can any of the company-specific risk be diversified away by investing in both Nova and Strauss 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 Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Strauss Group, you can compare the effects of market volatilities on Nova and Strauss 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 Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Strauss.
Diversification Opportunities for Nova and Strauss
Excellent diversification
The 3 months correlation between Nova and Strauss is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Strauss Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strauss Group 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 Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strauss Group has no effect on the direction of Nova i.e., Nova and Strauss go up and down completely randomly.
Pair Corralation between Nova and Strauss
Assuming the 90 days trading horizon Nova is expected to generate 1.66 times more return on investment than Strauss. However, Nova is 1.66 times more volatile than Strauss Group. It trades about 0.1 of its potential returns per unit of risk. Strauss Group is currently generating about 0.0 per unit of risk. If you would invest 3,887,000 in Nova on September 1, 2024 and sell it today you would earn a total of 2,628,000 from holding Nova or generate 67.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Strauss Group
Performance |
| Timeline |
| Nova |
| Strauss Group |
Nova and Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Strauss
The main advantage of trading using opposite Nova and Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Strauss 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 Strauss will offset losses from the drop in Strauss' long position.The idea behind Nova and Strauss Group 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.| Strauss vs. Shufersal | Strauss vs. Israel Discount Bank | Strauss vs. Bank Leumi Le Israel | Strauss vs. Azrieli Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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