Correlation Between Netz Hotels and IDI Insurance
Can any of the company-specific risk be diversified away by investing in both Netz Hotels and IDI Insurance 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 Netz Hotels and IDI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netz Hotels and IDI Insurance, you can compare the effects of market volatilities on Netz Hotels and IDI Insurance 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 Netz Hotels with a short position of IDI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netz Hotels and IDI Insurance.
Diversification Opportunities for Netz Hotels and IDI Insurance
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Netz and IDI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Netz Hotels and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance and Netz Hotels 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 Netz Hotels are associated (or correlated) with IDI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI Insurance has no effect on the direction of Netz Hotels i.e., Netz Hotels and IDI Insurance go up and down completely randomly.
Pair Corralation between Netz Hotels and IDI Insurance
Assuming the 90 days trading horizon Netz Hotels is expected to generate 1.49 times less return on investment than IDI Insurance. In addition to that, Netz Hotels is 3.6 times more volatile than IDI Insurance. It trades about 0.02 of its total potential returns per unit of risk. IDI Insurance is currently generating about 0.09 per unit of volatility. If you would invest 698,339 in IDI Insurance on August 29, 2024 and sell it today you would earn a total of 631,661 from holding IDI Insurance or generate 90.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netz Hotels vs. IDI Insurance
Performance |
| Timeline |
| Netz Hotels |
| IDI Insurance |
Netz Hotels and IDI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netz Hotels and IDI Insurance
The main advantage of trading using opposite Netz Hotels and IDI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netz Hotels position performs unexpectedly, IDI Insurance 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 IDI Insurance will offset losses from the drop in IDI Insurance's long position.| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Brainsway | Netz Hotels vs. Mivne Real Estate | Netz Hotels vs. Photomyne |
| IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Israel Discount Bank | IDI Insurance vs. Bezeq Israeli Telecommunication | IDI Insurance vs. Elbit Systems |
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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