Correlation Between Poalim Ibi and Diplomat Holdings
Can any of the company-specific risk be diversified away by investing in both Poalim Ibi and Diplomat Holdings 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 Poalim Ibi and Diplomat Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poalim Ibi and Diplomat Holdings, you can compare the effects of market volatilities on Poalim Ibi and Diplomat Holdings 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 Poalim Ibi with a short position of Diplomat Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poalim Ibi and Diplomat Holdings.
Diversification Opportunities for Poalim Ibi and Diplomat Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Poalim and Diplomat is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Poalim Ibi and Diplomat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diplomat Holdings and Poalim Ibi 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 Poalim Ibi are associated (or correlated) with Diplomat Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diplomat Holdings has no effect on the direction of Poalim Ibi i.e., Poalim Ibi and Diplomat Holdings go up and down completely randomly.
Pair Corralation between Poalim Ibi and Diplomat Holdings
Assuming the 90 days trading horizon Poalim Ibi is expected to generate 4.3 times less return on investment than Diplomat Holdings. But when comparing it to its historical volatility, Poalim Ibi is 1.51 times less risky than Diplomat Holdings. It trades about 0.15 of its potential returns per unit of risk. Diplomat Holdings is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 349,200 in Diplomat Holdings on September 1, 2024 and sell it today you would earn a total of 83,000 from holding Diplomat Holdings or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poalim Ibi vs. Diplomat Holdings
Performance |
| Timeline |
| Poalim Ibi |
| Diplomat Holdings |
Poalim Ibi and Diplomat Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poalim Ibi and Diplomat Holdings
The main advantage of trading using opposite Poalim Ibi and Diplomat Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poalim Ibi position performs unexpectedly, Diplomat Holdings 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 Diplomat Holdings will offset losses from the drop in Diplomat Holdings' long position.| Poalim Ibi vs. Inrom Construction Industries | Poalim Ibi vs. Meitav Dash Investments | Poalim Ibi vs. Isras Investment | Poalim Ibi vs. MEITAV INVESTMENTS HOUSE |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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