Correlation Between Ratio Oil and Gilat Satellite
Can any of the company-specific risk be diversified away by investing in both Ratio Oil and Gilat Satellite 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 Ratio Oil and Gilat Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratio Oil Explorations and Gilat Satellite Networks, you can compare the effects of market volatilities on Ratio Oil and Gilat Satellite 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 Ratio Oil with a short position of Gilat Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratio Oil and Gilat Satellite.
Diversification Opportunities for Ratio Oil and Gilat Satellite
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ratio and Gilat is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ratio Oil Explorations and Gilat Satellite Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Satellite Networks and Ratio 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 Ratio Oil Explorations are associated (or correlated) with Gilat Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Satellite Networks has no effect on the direction of Ratio Oil i.e., Ratio Oil and Gilat Satellite go up and down completely randomly.
Pair Corralation between Ratio Oil and Gilat Satellite
Assuming the 90 days trading horizon Ratio Oil Explorations is expected to generate 0.91 times more return on investment than Gilat Satellite. However, Ratio Oil Explorations is 1.1 times less risky than Gilat Satellite. It trades about 0.07 of its potential returns per unit of risk. Gilat Satellite Networks is currently generating about 0.04 per unit of risk. If you would invest 22,614 in Ratio Oil Explorations on November 2, 2024 and sell it today you would earn a total of 15,626 from holding Ratio Oil Explorations or generate 69.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Ratio Oil Explorations vs. Gilat Satellite Networks
Performance |
| Timeline |
| Ratio Oil Explorations |
| Gilat Satellite Networks |
Ratio Oil and Gilat Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ratio Oil and Gilat Satellite
The main advantage of trading using opposite Ratio Oil and Gilat Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratio Oil position performs unexpectedly, Gilat Satellite 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 Gilat Satellite will offset losses from the drop in Gilat Satellite's long position.| Ratio Oil vs. Rapac Communication Infrastructure | Ratio Oil vs. Amir Marketing and | Ratio Oil vs. Tower Semiconductor | Ratio Oil vs. Insuline Medical |
| Gilat Satellite vs. Elbit Systems | Gilat Satellite vs. Tower Semiconductor | Gilat Satellite vs. Kamada | Gilat Satellite vs. Delek 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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