Correlation Between Paz Oil and Clal Industries
Can any of the company-specific risk be diversified away by investing in both Paz Oil and Clal Industries 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 Paz Oil and Clal Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paz Oil and Clal Industries and, you can compare the effects of market volatilities on Paz Oil and Clal Industries 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 Paz Oil with a short position of Clal Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paz Oil and Clal Industries.
Diversification Opportunities for Paz Oil and Clal Industries
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Paz and Clal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Paz Oil and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and Paz Oil 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 Paz Oil are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Paz Oil i.e., Paz Oil and Clal Industries go up and down completely randomly.
Pair Corralation between Paz Oil and Clal Industries
Assuming the 90 days trading horizon Paz Oil is expected to generate 5.8 times less return on investment than Clal Industries. But when comparing it to its historical volatility, Paz Oil is 1.81 times less risky than Clal Industries. It trades about 0.1 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 187,000 in Clal Industries and on September 1, 2024 and sell it today you would earn a total of 30,900 from holding Clal Industries and or generate 16.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paz Oil vs. Clal Industries and
Performance |
| Timeline |
| Paz Oil |
| Clal Industries |
Paz Oil and Clal Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paz Oil and Clal Industries
The main advantage of trading using opposite Paz Oil and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paz Oil position performs unexpectedly, Clal Industries 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 Clal Industries will offset losses from the drop in Clal Industries' long position.| Paz Oil vs. Delek Group | Paz Oil vs. Bank Hapoalim | Paz Oil vs. Oil Refineries | Paz Oil vs. Bezeq Israeli Telecommunication |
| Clal Industries vs. Israel Land Development | Clal Industries vs. Tower Semiconductor | Clal Industries vs. Mivtach Shamir | Clal Industries vs. Inbar Group Finance |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Stocks Directory Find actively traded stocks across global markets |