Correlation Between Partner and Palram
Can any of the company-specific risk be diversified away by investing in both Partner and Palram 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 Partner and Palram into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Partner and Palram, you can compare the effects of market volatilities on Partner and Palram 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 Partner with a short position of Palram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Partner and Palram.
Diversification Opportunities for Partner and Palram
Weak diversification
The 3 months correlation between Partner and Palram is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Partner and Palram in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palram and Partner 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 Partner are associated (or correlated) with Palram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palram has no effect on the direction of Partner i.e., Partner and Palram go up and down completely randomly.
Pair Corralation between Partner and Palram
Assuming the 90 days trading horizon Partner is expected to generate 2.29 times more return on investment than Palram. However, Partner is 2.29 times more volatile than Palram. It trades about 0.4 of its potential returns per unit of risk. Palram is currently generating about 0.19 per unit of risk. If you would invest 156,000 in Partner on August 25, 2024 and sell it today you would earn a total of 42,700 from holding Partner or generate 27.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Partner vs. Palram
Performance |
| Timeline |
| Partner |
| Palram |
Partner and Palram Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Partner and Palram
The main advantage of trading using opposite Partner and Palram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Partner position performs unexpectedly, Palram 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 Palram will offset losses from the drop in Palram's long position.| Partner vs. Bank Leumi Le Israel | Partner vs. Teva Pharmaceutical Industries | Partner vs. Bank Hapoalim | Partner 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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